[G.R. NO. 160065 : February 28, 2006]

104 FELINO EBREO, SPOUSES ANTONIO and EVELYN P. BERAÑA, IGNACIO EBREO and ELEUTERIA CUETO, Petitioners, v. GIL EBREO, represented by His Attorney-in-Fact, FELIXBERTO EBREO, FLAVIANO

EBREO and HOMOBONO CUETO, Respondents.

D E C I S I O N

Does an annotation in a tax declaration of an alleged Deed of Sale sufficiently prove conveyance of title to a property? This is the issue presented to Us in the present petition.

The factual antecedents of this case are narrated herein:

A Complaint dated 04 January 1994, docketed as Civil Case No. 4132 for Partition, Reconveyance, Accounting and Damages, was filed by Gil Ebreo, represented by his Attorney-in-Fact Felixberto Ebreo, Flaviano Ebreo and Homobono Cueto against petitioners Felino Ebreo, Spouses Antonio Ebreo and Evelyn P. Beraña-Ebreo, Ignacio Ebreo and Eleuteria Cueto before the Regional Trial Court (RTC) of Batangas City, Branch 7.

From plaintiffs' account in their complaint, Felipe Ebreo died intestate in 1926 leaving behind as heirs his five children, Gil, Flaviano, Felino, Ignacio, and Felipa.1 Subsequently, Felipa died leaving behind her heirs, Genoveva, Homobono and Eleuteria all surnamed Cueto. Genoveva died in 1991 without any issue. Defendants-spouses Antonio Ebreo and Evelyn Beraña are the son and daughter-in-law, respectively, of defendant Felino, one of the five children of Felipe Ebreo.

Felipe Ebreo left to his children an untitled parcel of land situated in Barangay Sampaga, Batangas City, more particularly described as follows:

Isang palagay na lupang palayanin o linangin ipinamumuwis sa ilalim ng Tax Declaration No. 39949 S-1953, na ang mga karatig sa Ilaya ay Prudencia Coz, sa Silangan ay Pablo Cantro at Santiago Banaag, sa ibaba ay Ilat (Creek) at sa Kanluran ay Marcos at Fortunato Banaag may luwang na 31,781 metros kuwadrados humigit kumulang at may balor amiliorada na halagang P950.00, lalong kilala sa Lote 9046 ng sukat katastro dito sa Batangas.2

Pursuant to the subdivision made by their father Felipe, Lot No. 9046 was subdivided into six lots identified as Lots A, B, C, D, E and F.3 ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

On 11 September 1967, the five heirs of Felipe Ebreo, through themselves and their representatives, executed and signed a document entitled, "Kasulatan ng Pagbabahagi ng Lupa"4 where they extrajudicially partitioned the above-described property except the portion known as Lot No. 9046-F. As agreed upon by these heirs, Lot No. 9046-F, with an area of 13,799 square meters, shall remain under the co-ownership of Gil, Flaviano, Felino, Ignacio and the heirs of Felipa Ebreo. However, plaintiffs were surprised to discover that Lot 9046-F was declared for taxation purposes in the name of defendant Antonio Ebreo. Based on plaintiffs' recitals, they alleged that they never sold, ceded, conveyed or transferred their rights, share and co-ownership over Lot 9046 - F.

Answering the complaint, the defendants countered that after the execution of the Kasulatan ng Pagbabahagi ng Lupa, by and among the heirs of the late Felipe Ebreo, Lot 9046-F was sold by the heirs to Santiago Puyo. By virtue of this sale, the corresponding Real Property Tax Declaration was transferred in the name of Santiago Puyo as owner. However, the deed of sale evidencing this transaction was never presented.

As narrated by the defendants, Tax Declaration No. 39241,5 beginning in the year 1969 covering Lot 9046-F was under the names of the heirs of Felipe Ebreo. Thereafter, upon the sale of the lot by the heirs of Felipe Ebreo to Santiago Puyo, Tax Declaration No. 39241 was cancelled and a new one, Tax Declaration No. 482216 dated 15 January 1973, was issued in the name of Santiago Puyo. On this tax declaration, the alleged sale of Lot 9046-F by the Heirs of Felipe Ebreo to Santiago Puyo was annotated. Soon, Tax Declaration No. 48221 was cancelled by Tax Declaration No. 40427 for the year 1974, still in the name of Santiago Puyo. Upon the sale by Santiago Puyo of Lot 9046 - F to Antonio Ebreo on 23 July 1976, Tax Declaration No. 4042 was cancelled and a new one, Tax Declaration No. 50669,8 for the year 1977, was issued in the name of Antonio Ebreo. This Tax Declaration was later on revised and cancelled by Tax Declaration No. 075-534 upon the marriage of defendant Antonio Ebreo to defendant Evelyn Beraña. From 1977 up to 1994, defendants-spouses Antonio Ebreo and Evelyn Beraña religiously paid the taxes due on the land.9

Defendants further alleged that the Deed of Absolute Sale of Lot No. 9046-F by the heirs of Felipe Ebreo to Santiago Puyo was executed and ratified sometime in 1968 before Attorney Doroteo M. Chavez of Batangas City. From 1968 to 1976, Mr. Santiago Puyo possessed said lot peacefully, continuously, publicly and in the concept of owner. As stated earlier, on 23 July 1976, Lot No. 9046-F was sold by Santiago Puyo by way of Absolute Sale, to defendant Antonio

Ebreo. The Deed of Absolute Sale or "Ganap na Bilihan ng Lupa"10 was duly executed and ratified before one Attorney Meynardo L. Atienza.

After due proceedings, a decision11 dated 18 August 1997, was rendered by the RTC which disposed:

WHEREFORE, in view of the foregoing, judgment is rendered as follows:

(1) Ordering the parties-in-interest (heirs of Felipe Ebreo and/or their representatives) to partition Lot No. 9046-F among themselves by proper instruments of conveyance under Sec. 2, Rule 69 of the 1997 Rules of Civil Procedure, and in default thereof, the partition shall be conducted in accordance with Sec. 3, et. seq., of the same Rule.

(2) Ordering the dismissal of the Counterclaim of the defendants.

(3) Ordering the defendants, jointly and severally, to pay the plaintiffs the sum of TWENTY THOUSAND PESOS (P20,000.00), Philippine Currency, for and as attorney's fee.

(4) Ordering the defendants, jointly and severally, to pay the costs of suit.12

Defendants - appellants appealed the decision of the RTC to the Court of Appeals. In a decision13 dated 27 February 2003, the Court of Appeals denied the appeal for lack of merit and affirmed in toto the decision of the trial court. The Court of Appeals held:

The main issue in this case is whether or not a valid transfer of Lot No. 9046-F was effected which conveyed ownership of the property to Santiago Puyo. The defendant-appellants rely on the Deed of Sale supposedly executed by the heirs of Felipe Ebreo in favor of Santiago Puyo. However, defendant-appellants failed to produce the alleged Deed of Sale in violation of the Best Evidence Rule.

x x x

The best evidence rule, applied to documentary evidence, operates as a rule of exclusion, that is, secondary (or substitutionary) evidence cannot inceptively be introduced as the original writing itself must be produced in court, except in the four instances mentioned in Section 3. (Regalado, Remedial Law Compendium, Volume II, Seventh Revised Edition, p. 555). Defendant-appellants miserably failed to prove that their case is included among the exceptions to the Rule.

The testimony of Felino Ebreo regarding the execution of the Deed of Sale cannot be given credence. In fact, it was contradicted by his supposed co-sellers and co-owners. His claim that it was borrowed by Eleuteria Cueto and never returned to him was also refuted by Eleuteria Cueto. Not only are the testimonies of Felino Ebreo and his son Antonio Ebreo self-serving, they are also uncorroborated by independent witnesses. Defendant-appellants did not even look for a copy of the deed of sale on the notarial registry of Atty. Chavez, the notary public who allegedly notarized the deed of sale. Neither did they look for a copy in the archives of the Court where it should have been submitted as required by the notarial law. In the words of the trial court, "the decisive documentary evidence remains an elusive phantom and conspicuously unproven." The controversial deed of sale not having been produced as required by the rules of evidence, the trial court was correct in ruling that Santiago Puyo acquired no rights whatsoever to Lot No. 9046-F.

Since there was no valid transfer of the ownership of the subject lot from the heirs of Felipe Ebreo to Santiago Puyo, the subsequent transfer thereof to Antonio Ebreo is ineffectual. It is essential that the seller is the owner of the property he is selling (Noel v. Court of Appeals, 240 SCRA 78). Moreover, the fact that the tax declarations for said lot were issued in the name of Antonio Ebreo is of no moment for they are not conclusive proof of ownership. It must be remembered that a tax declaration may be issued to any claimant even if it is not supported by any deed.

Neither can defendant-appellants' open, adverse, notorious and continuous possession of the land for several years amount to ownership for they are co-owners of the land as evidenced by the "Kasulatan ng Pagbabahagi Ng Lupa." A co-owner cannot acquire by prescription the share of the other co-owners absent a clear repudiation of co-ownership duly communicated to the other co-owners. (Trinidad v. Court of Appeals, 289 SCRA 188).14

The motion for reconsideration of the defendants-appellants was denied in the resolution of the Court of Appeals dated 22 September 2003.15

Hence this Petition for Review on Certiorari .

The following issues are submitted for resolution in this petition:

1) Whether or not the annotation of the Deed of Sale appearing in Tax Declaration No. 48221 is a sufficient proof of transfer in line with the doctrine of presumption of regularity of performance of official duty.

2) Whether or not entries in official records are admissible in evidence to establish the fact of valid transfer of Lot No. 9046-F that effectively conveyed ownership of the property from the heirs of Felipe Ebreo to Santiago Puyo.16

After a painstaking review of the records, we find the petition bereft of merit. First, it is important to re-state the general rule that the findings of the trial court which are factual in nature, especially when affirmed by the Court of Appeals deserve to be respected and affirmed by this court provided they are supported by substantial evidence on record, as in the case at bench.17

As recounted by defendants, now petitioners, Antonio and Evelyn Ebreo, Lot 9046-F was sold by the heirs of Felipe Ebreo initially to Santiago Puyo sometime in 1967 or 1968 as evidenced by a deed of sale executed and ratified before Atty. Doroteo Chavez in Batangas City. Santiago Puyo caused the transfer of the tax declaration in his name and caused the sale to be annotated therein. Only this annotation in the tax declaration was offered as proof of the sale. Santiago Puyo took possession, cultivated the land, exercised uninterrupted ownership and paid real estate taxes thereon for a period of eight years.

Petitioners went on further to state that the Deed of Sale from the heirs of Felipe Ebreo to Santiago Puyo could not be presented because the copy on file with the Office of the City Assessor was lost in the fire which occurred in 23 May 1979 that gutted the building housing their office. From then on, petitioners advance that they have paid the real estate taxes on the land and were in open, continous and uninterrupted possession until the Complaint for Partition, Reconveyance and Damages was filed by the Respondents.

On the basis of the above narrations, petitioners insist that there was a valid transfer of the lot from the heirs of Felipe Ebreo to Santiago Puyo, and thereafter from Santiago Puyo to them. To buttress this claim of sale by the heirs to Santiago Puyo, petitioners presented the testimony of Antonio Pajilan of the City Assessors Office of Batangas City who testified on the annotation in Tax Declaration No. 48221. The annotation reads:

Deed of sale

D.V. P2,500.00

Doc. on file

Doc. No. 312

Page No. 17

Book No. VI

Series of 196718

The testimony of Pajilan went on as follows:

Q I am showing to you a tax declaration No. 32941 in the name of Gil Flaviano, Felino, Ignacio, Genoveva, Eleuteria Cueto which is already marked as Exhibit "10" for the defendants in this case and Exhibit "F" for the plaintiff, will you please examine the same and identify it?cralawlibrary

A Witness is examining the document. I think this tax declaration is an owner's copy, Sir.

Q But this tax declaration was issued by your office, the City Assessor of Batangas?cralawlibrary

A Yes, Sir.

Q Can you inform before this Honorable Court, if this tax declaration was still existing in your office or a copy thereof?cralawlibrary

A This tax declaration could not be found because our office was burned on May 29, 1979, it could not be found anymore, Sir.

Q You are also required by this Honorable Court to bring a copy of the tax declaration No. 48221, do you have copy of the same?cralawlibrary

A I have copy of that tax declaration, Sir.

Q Will you please produce the same?cralawlibrary

Witness is producing a copy of tax declaration No. 32941 in the name of Santiago Puyo.

A Can you explain how this tax declaration was placed in the name of Santiago Puyo?cralawlibrary

Q Previously this tax declaration was owned by Gil, Flaviano, Felino, Ignacio Ebreo and Genoveva, Eleuteria and Homobono Cueto under PD 32941 this tax declaration is under 48221 in the name of Santiago Puyo and this was transferred by a virtue of Deed of Sale annotated in the tax declaration and in the Deed of Sale and purchase value was there: 2,500.00 document docketed No. 312, Page 17, Book No. 6, Series of 1967, Doroteo de Chavez, the Notary Public, Sir.

Q Can you explain why this annotation was placed or written in this tax declaration No. 48221?cralawlibrary

A This was placed under Tax Declaration No. 48221 because the office of the City Assessor transferred the tax declaration and annotated the instrument used in the transfer of the tax declaration, Sir.

Q Do you have copy of that document which is the basis of the transfer?cralawlibrary

A We could not be located (sic) because as I have said earlier our office was burned on May 23, 1979, Sir.

Q So what does this phrase Deed of Sale, what do you mean by that?cralawlibrary

A I placed that, that is the title of the instrument used in the transfer of this tax declaration, Sir.19

It is worth noting that Antonio Pajilan, an employee of the City Assessor's Office of Batangas City20 who testified regarding Tax Declaration No. 48221 dated 15 January 1973 on which was annotated the alleged sale between the heirs of Felipe Ebreo to Santiago Puyo, was employed in the said office only in the year 1978. Thus, he did not make nor did he witness the causing of the annotation as he was not yet employed in the said office at that time. Likewise, he was neither present when the deed of sale was executed nor did he personally see the said deed of sale. For these reasons, the testimony of Pajilan is inconclusive.

Petitioners next argue that Tax Declaration No. 48221 in the name of Santiago Puyo enjoys the presumption of regularity in its issuance. It is a good time as any to re-state that this rule is a mere presumption, not absolute nor inflexible and applies only in the absence of proof to the contrary.21 Besides, the mere fact that the disputed property may have been declared for taxation purposes in the name of the petitioners does not necessarily prove ownership. In the same manner, neither does the payment of taxes conclusively prove ownership of the land paid for.22 It is merely an indicium of a claim of ownership.23

Petitioners also presented the testimony of Felino Ebreo, father of petitioner Antonio Ebreo, who testified that the heirs of Felipe Ebreo sold Lot 9046 'F to Santiago Puyo.24 When queried on the whereabouts of the document of sale, Felino alleged that it was borrowed by his niece Eleuteria Cueto who is the daughter of one of the heirs, Felipa Ebreo.25 According to Felino, Eleuteria refused to return the document and even got angry when he tried to demand its return.26 From Felino's account,27 there are three copies of the missing deed of sale. Lamentably, petitioners failed to present any one of them.

Finally, petitioners presented Asuncion Aguado, step-daughter of Santiago Puyo, who testified that her stepfather Santiago Puyo bought the subject lot from the Ebreo heirs.28 Similar to Pajilan's testimony, Aguado's testimony cannot be given much weight in view of the fact that save for her bare allegations that Lot 9046-F was purchased by her stepfather Santiago Puyo, she was not likewise present when the deed was executed. In her testimony she merely stated that her stepfather paid taxes for his real estate properties but could not state with specificity if the payment was made for Lot 9056-F.29

To summarize, the testimonies of Pajilan, Felino Ebreo and Asuncion Aguado are at most secondary evidence; hence, they are inadmissible considering that the petitioners, as offerors of the Deed of Sale, thereof failed to prove any of the exceptions provided in Section 3, Rule 130 of the Rules of Court and to establish conditions for their admissibility.30 Even if they are admitted, they have no probative value.31 This rule provides:

SEC. 3. Original document must be produced; exceptions. - When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; andcralawlibrary

(d) When the original is a public record in the custody of a public officer or is recorded in a public office.

Under this rule, it is axiomatic that before a party is allowed to adduce secondary evidence to prove the contents of the original of a deed or document, the party has to prove with the requisite quantum of evidence, the loss or destruction or unavailability of all the copies of the original of the said deed or document. As former Supreme Court Chief Justice Manuel V. Moran declared:

"Where there are two or more originals, it must appear that all of them have been lost, destroyed or cannot be produced before secondary evidence can be given of any one. For example, a lease was executed in duplicate, one being retained by the lessor and the other by the lessee. Either copy was, therefore, an original, and could have been introduced as evidence of the contract without the production of the other. One of these originals could not be found. The non-production of the other was not accounted for it was held that "under these circumstances, the rule is that no secondary evidence of the contents of either is admissible until it is shown that originals must be accounted for before secondary evidence can be given of any one."

Indeed, before a party is allowed to adduce secondary evidence to prove the contents of the original of the deed, the offeror is mandated to prove the following:

"(a) the execution and existence of the original (b) the loss and destruction of the original or its non-production in court; and (c) unavailability of the original is not due to bad faith on the part of the offeror."32

On this score, the factual findings of the trial court are worth repeating. It held:

The pivotal document of sale allegedly executed by the heirs of Felipe Ebreo in favor of Santiago Puyo and chiefly relied upon by defendant Antonio Ebreo as the derivative basis of his ownership is sadly missing and remains a phantom in the dark. The testimonies of Felino Ebreo, Asuncion Aguado and Antonio Ebreo to prove by way of recollection of witnesses that Lot 9046-F was sold to Santiago Puyo sometime in 1967 for P2,500.00 by virtue of a deed notarized before deceased Atty. Doroteo Chavez merits scant consideration. They were the verbal say-so of interested parties and attributed acts to a party whose lips had been sealed by death. Quite evidently, their testimony should be taken cum grano salis - with a grain of salt.

Both the testimonies of Asuncion Aguado and Antonio Ebreo lacked the legal underpinning needed to prove the deed of sale. Their testimonies were not recollection of witnesses who saw the execution and delivery of the document. According to Sec. 4, Rule 130, the contents of the lost writing may be proved, inter alia, by the recollection of witnesses. As matters stand, however, Aguado's testimony relates not to the execution of the document but to what her father (Santiago Puyo) did with the property after it was already acquired. (t.s.n. pp. 4-7, Direct, May 17, 1995) Similarly, Antonio Ebreo's testimony does not refer to the execution and delivery of the deed of sale but of having allegedly seen said document when he purchased the lot from Santiago Puyo. He testified that "when I bought it from Santiago Puyo, he brought with him the Tax Declaration in the name of Santiago Puyo as well as the deed of sale between my father and his brothers and Santiago Puyo." (t.s.n. pp. 13-14, Direct, Aug. 16, 1995). In fine, they were not witnesses to the execution and delivery of the document of sale to qualify their testimonies under the phrase "recollection of witnesses."

Neither does the testimony of Felino Ebreo evoke faith and confidence. His salutary recollection of the missing document failed to instill credulity. For one, it was uncorroborated by any of the parties to the alleged deed of sale. In fact, such sale was directly controverted by his supposed co-sellers and co-owners Gil and Flaviano. (t.s.n. pp. 7-8, Direct, July 18, 1994; t.s.n. pp. 22-23, Cross, Sept. 29, 1994) Then too, it appears rather unusual for the heirs to retain Lot 9046-F in co-ownership in their partition agreement of 1967 and sell the said Lot that very same year (1967) if not on the same occasion. Felino Ebreo did not give the exact date of the supposed sale to Santiago Puyo except to say that it was sold in 1967. The Court got the impression, though, that it was on the same occasion as the partition agreement. (t.s.n. pp. 6-7, 14-16, Direct, Feb. 28, 1995) More important, his humanistic bias to favor his son Antonio

Ebreo and his natural interest to defend his actuations leading to the issuance of the Tax Decl. 50669 (Exh. "2") which he signed caution us to accept his testimony with great care. He does not have the cold neutrality of a disinterested party. He was covetous of gain. The Tax Decl. No. 50669 that transferred in 1976 the property in the name of Antonio Ebreo was signed by Felino Ebreo himself (Exh. "2"). This illustrated a dialectical connection between him and his favored son Antonio Ebreo. Finally, Felino Ebreo's claim that he could not produce it because it was borrowed by his niece Eleuteria Cueto and never returned to him was squarely refuted by said Eleuteria Cueto when she testified in rebuttal for the plaintiffs. (t.s.n. pp. 9, 12-13, Direct, Feb. 28, 1995) (See testimony of Eleuteria Cueto in rebuttal on July 17, 1997)

While many things have been said about the crucial deed of sale, the decisive documentary evidence remains an elusive phantom and conspicuously unproven. The ownership of Santiago Puyo becomes moreover doubtful because while the alleged sale was executed by the heirs of Felipe Ebreo in 1967 yet the earliest Tax Declaration in the name of Santiago Puyo was issued only in 1973 (Exh. "9") or 1974 (Exh. "4") as far as the record of this case can reveal. The issuance of a new tax declaration in the name of the sunrise owner (Puyo) which was late by six (6) or seven (7) years naturally cast a slur on the veracity of the sale.

The typewritten entry on Tax Decl. No. 48221 (Exhs. "9" and "9-A") detailing the particulars of the alleged deed of sale in favor of Santiago Puyo is patently suspicious and a very very poor ersatz for the primary document. While the sale allegedly took place in 1967, said deed was annotated on Exh. "9" which however only "begins with the year 1973." Moreover, while the alleged sale took place in 1967, yet Tax. Decl. No. 32941 (Exh. "10") that was issued on Feb. 7, 1968 still carried the names of Gil, Flaviano, Felino and Ignacio, all EBREO and Genoveva, Eleuteria and Homobono, all CUETO and not the name of Santiago Puyo. There even appears thereon the annotation that the 1968 tax was paid on Jan. 29, 1968 - with no mention of Santiago Puyo despite his having allegedly acquired the property the year before (1967).

Riveting further its attention to the typewritten entry on Exh. "9", the Court finds it rather strange that such an entry appears on the Tax Declaration. Firstly, it is not a widely accepted practice to make such annotation. Secondly, there is more than meets the eye in the conspicuous presence of this annotation only on this particular Tax Declaration (Exh. "9"). All other tax declarations in this case do not have similar entry to identify the documentary basis for the issuance of the latest tax declaration. Thirdly, not even Tax Decl. Nos. 50669 and 075-534 (Exhs. "2" and "3") of Antonio Ebreo carry such annotation to indicate that he acquired the property by virtue of Doc. No. 70, Page No. 15, Book No. I, Series of 1976 of the Notarial Register of Atty. Meynardo L. Atienza. The pregnant suspicion lurks that the alleged particulars of the document of sale from Santiago Puyo to Antonio Ebreo were belatedly annotated.

As icing on the cake, Gil Ebreo categorically stated it was Felino Ebreo who authored the transfer. He testified on cross-examination that it was his eldest brother Felino Ebreo who was the caretaker of the lot and in-charge of the payment of taxes. It was his brother Felino who sold the subject lot known as Lot No. 9046-F in favor of his son Antonio Ebreo. (t.s.n. pp. 16-17, Cross, July 18, 1994) The evidence tended to show that indeed it was Felino Ebreo who had the opportunity to cause the transfer as it was he (Felino) who took possession of the lot and acted as its overseer. (t.s.n. pp. 3-4, Direct, Nov. 17, 1994)

The alleged document of sale executed between Santiago Puyo and Antonio Ebreo denominated as "Ganap na Bilihan ng Lupa" (Exh. "1"), was ineffectual for the purpose of transferring ownership of disputed Lot No. 9046-F to said Antonio Ebreo because the alleged vendor Santiago Puyo has not, as heretofore explained, acquired it from the heirs of Felipe Ebreo as the transaction has no supporting document of sale. It is self-evident that the seller cannot transfer more than what he has or as oftenly stated hyperbolically, the river cannot rise above its source. Moreover, Clerk of Court Jose C. Corales certified that the Ganap na Bilihan ng Lupa (Doc. No. 70, Page No. 15, Book No. I, Series of 1976) despite diligent efforts could not be found in the old CFI vault located at the Capitol Building, Batangas City. (Exh. "E" - Rebuttal)

The fact that tax declarations for Lot [No.] 9046-F were issued in the name of defendant Antonio Ebreo (Exhs. "2" and "3") and that he paid the taxes for the land (Exh. "8") provides no evidentiary value that he was the owner thereof. The existence of the tax declarations and payment of taxes did not transmogrify his possession into ownership. Tax declarations are not sufficient evidence to prove possession in the concept of owners. (Martinez, D., Summary of 1990 Supreme Court Rulings, Part. II, p. 734) Tax receipts are not conclusive evidence of ownership.33

In sum, considering that the annotation of the disputed Deed of Sale in a tax declaration is not sufficient proof of the transfer of property and inasmuch as the subject of inquiry is the Deed of Sale, it was incumbent on the petitioners to adduce in evidence the original or a copy of the deed consistent with Section 3, Rule 130 of the Rules of Court. In the absence of the said document, the exhortations of petitioners regarding the existence of said deed of sale must fail.

Wherefore, premises considered, the instant petition is Denied for lack of merit and the decision of the Court of Appeals dated 27 February 2003 affirming in toto the decision of the trial court dated 18 August 1997 is likewise Affirmed. Costs against petitioners.

SO ORDERED.21 REVISED RULES OF COURT, Rule 131, Section 3(m).

125 [G.R. NO. 163915 : October 12, 2006]

ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION, Petitioner, v. COMFAC CORPORATION, Respondent.

D E C I S I O N

This Petition for Review assails the Decision1 dated March 12, 2003 and the Resolution dated June 2, 2004 of the Court of Appeals in CA-G.R. CV No. 69123, which affirmed with modification the trial court's decision and denied the motion for reconsideration, respectively.

The antecedent facts of the case are as follows:

Petitioner Asian Construction and Development Corporation (AsiaKonstruct) awarded respondent Comfac Corporation a contract for raised flooring system for the PNOC-EDC, LGPP HVAC Marshalling Station Building, in Ormoc, Leyte, and another contract for airconditioning and ventilation system for the PNOC-EDC Marshalling and Relay Building of Leyte HVAC Switchyard Project, costing P1,698,635 and P4,000,000, respectively. On November 28, 1996, Comfac turned over the project to PNOC, and issued the Certificates of Completion, which were confirmed by Rene T. Soriao, Group Manager of ASIAKONSTRUCT.

On May 5, 8, and 11, 1998, Comfac sent AsiaKonstruct demand letters for the unpaid balance of P1,969,863.50. But, AsiaKonstruct failed to pay the amount, prompting Comfac to file a complaint for collection with the Regional Trial Court of Makati City. It also prayed for attorney's fees equivalent to 20% of the amount demanded, plus P2,000 attorney's fee per appearance, and exemplary damages of P500,000.

In its defense, AsiaKonstruct alleged that Comfac had no cause of action; Comfac's claim had been paid, waived, abandoned and/or extinguished; the Certificates of Completion were unauthorized; the projects were not completed; no demand for payment was made; the amount claimed was not yet due; the amount claimed was bloated because ASIAKONSTRUCT did not receive all the labor, materials, tools, equipment, and the technical expertise that were being charged; Comfac did not deduct the withholding taxes, material charges and the payments made; and it did not agree to pay interests, penalty, attorney's fees and court costs.

After the admission of Comfac's evidence, the trial court, in an order dated November 23, 1999, deemed AsiaKonstruct to have waived its right to present its evidence due to its counsel's continued absence during trial despite notice. Thereafter, judgment was rendered as follows:

Wherefore, in view of the foregoing, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay plaintiff as follows:

1. the amount of P1,969,863.[50] as actual damages plus interest at fourteen percent (14%) per annum and penalty at twenty-five [percent] (25%) per annum from January 2, 1998, date of the final statement of account, until fully paid;

2. the amount of P50,000.00 as attorney's fees; andcralawlibrary

3. costs and expenses of litigation.

SO ORDERED.2

AsiaKonstruct elevated the case to the Court of Appeals on the following grounds: (a) the invoices, Exhibits "K" to "O", and other documentary exhibits were not properly proved and authenticated; (b) the full completion of the works on the project was not proven; (c) the 10% retention and 1% expanded withholding tax was not deducted from the alleged balance of P 1,969,863.50; (d) the parties did not expressly stipulate in writing the interest and penalties; (e) the imposition of the 14% interest plus 25% penalty was unconscionable; and (f) the award of attorney's fees was not proper in the absence of proof of bad faith.3

The Court of Appeals upheld the admissibility of the invoices, Exhibits "K" to "O", as these were properly presented by Comfac during the trial and not objected to by AsiaKonstruct. Moreover, the appellate court held that it was enough that the invoices were identified during the trial since the subject of the inquiry was not their contents but a fact to which these were merely collateral or incidental. The appellate court also upheld (1) the validity of the Certificates of Completion as these were confirmed and signed by the representative of the project owner; (2) the correctness of Comfac's accounting with respect to the deduction of the 10% retention money and withholding tax; and (3) the award of attorney's fees. The appellate court ruled, however, that in the absence of stipulation, the proper interest payable should only be 6%. The decretal portion of the decision reads:

WHEREFORE, IN VIEW OF THE FOREGOING, the decision appealed from is hereby AFFIRMED, with the following modifications:

a) a six percent (6%) legal interest per annum on the amount of P1,969,863.50 as damages is imposed in lieu of the 14% interest and penalty of 25%; andcralawlibrary

b) the 1% withholding tax should be deducted from the balance of each of the contracts.

SO ORDERED.4

AsiaKonstruct moved for reconsideration but it was denied. Now before us, it challenges the conclusion reached by the Court of Appeals and raises the following issues for resolution:

I. WHETHER OR NOT EXHIBITS "K" TO "O" WERE PROPERLY AUTHENTICATED IN ACCORDANCE WITH THE RULES OF COURT;

II. WHETHER OR NOT RESPONDENT WAS ABLE TO PROVE COMPLETION OF THE PROJECT;

III. WHETHER OR NOT RESPONDENT IS ENTITLED TO ATTORNEY'S FEES; AND

IV. WHETHER OR NOT THE 6% - INTEREST SHOULD BE BASED ON THE BALANCE AFTER DEDUCTING THE 1% - WITHHOLDING TAX.5

We will discuss the first two issues jointly.

AsiaKonstruct maintains that the invoices were not properly authenticated as Comfac's witness, Mrs. Erlinda Rolda, merely testified on checking the invoices and did not identify the signatories to these. It reiterates its assertion that the project was not yet complete and that the Certificates of Completion were unauthorized.

On the other hand, Comfac contends that the invoices were deemed admitted as AsiaKonstruct did not object to them. It also argues that its witnesses duly testified to the completion of the projects.

The rule is that failure to object to the offered evidence renders it admissible,6 and the court cannot, on its own, disregard such evidence. We note that AsiaKonstruct's counsel of record before the trial court, Atty. Bernard Dy, who actively participated in the initial stages of the case stopped attending the hearings when Comfac was about to end its presentation. Thus, AsiaKonstruct could not object to Comfac's offer of evidence nor present evidence in its defense; ASIAKONSTRUCT was deemed by the trial court to have waived its chance to do so.

Note also that when a party desires the court to reject the evidence offered, it must so state in the form of a timely objection and it cannot raise the objection to the evidence for the first time on appeal.7 Because of a party's failure to timely object, the evidence becomes part of the evidence in the case. Thereafter, all the parties are considered bound by any outcome arising from the offer of evidence properly presented.8

ASIAKONSTRUCT also questions the authenticity of the Certificates of Completion. However, it has been uniformly held that findings of facts by the trial court, particularly when affirmed by the Court of Appeals, are binding upon this Court.9 The appellate court's conclusion on the authenticity of the Certificates of Completion binds us now.

On the issue of attorney's fees, AsiaKonstruct contends that attorney's fees, being in the nature of actual damages, must be proved by sufficient evidence. It argues that since Comfac failed to present proof of actual damage, there is no factual justification for the award. Comfac, on the other hand, counters that if AsiaKonstruct had paid its claim, it would have not resorted to litigation, hence the award is justified.

We agree with AsiaKonstruct on the matter of attorney's fees. Attorney's fees are not to be awarded every time a party wins a suit.10 Article 220811 of the Civil Code demands factual, legal and equitable justifications for the award of attorney's fees and its basis cannot be left to speculation and conjecture.12 Attorney's fee is allowed when a claimant is compelled to litigate with third persons or incur expenses to protect his interest by reason of an unjustified act or omission on the part of the party from whom it is sought. Indeed, Comfac was forced to litigate to collect payments, but due to lack of findings on the amount to be awarded, and since there is no sufficient showing of bad faith in AsiaKonstruct's refusal to pay, other than an erroneous assertion of the righteousness of its cause, the attorney's fee cannot be awarded against it.13

Anent the legal interest, AsiaKonstruct claims that the 6% legal interest should be based on the net amount after deducting the 1% withholding tax since the amount withheld is not due to Comfac. It submits that only P1,912,877.15, not P1,969,863.50, is subject to the 6% legal interest.

In its Brief filed with the Court of Appeals, Comfac alleged that the 1% withholding tax was not deducted from the payments of AsiaKonstruct because the latter had not presented the certificate of creditable withholding-tax-at-source required by the Bureau of Internal Revenue (BIR). Although this may be so, it does not mean that the withholding tax could not be deducted properly. The deduction of the 1% withholding tax from the balance payable is without qualification in the parties' contract.14 AsiaKonstruct is correct that it is only liable to pay the balance of P1,912,877.15, not the full amount of P1,969,863.50, and to remit to the BIR the P56,986.35 it had withheld, the computation of which is shown below.

First contract: P1,698,635 x 1% withholding tax = P 16,986.35

Second contract: P4,000,000 x 1% withholding tax = P 40,000.00

Total amount withheld = P 56,986.35

Thereafter, ASIAKONSTRUCT should provide Comfac with the certificate of creditable withholding-tax-at-source. Conformably, the 6% legal interest should be based on the balance payable under the contracts which is P1,912,877.15.

WHEREFORE, the petition is PARTIALLY GRANTED. The Decision dated March 12, 2003 and the Resolution dated June 2, 2004 of the Court of Appeals in CA-G.R. CV No. 69123 are MODIFIED as follows:

1. Asian Construction and Development Corporation (ASIAKONSTRUCT) is ordered to PAY Comfac Corporation the amount of P1,912,877.15 as the balance payable under the contracts with legal interest of 6% per annum from January 2, 1998, the date of the final statement of account, until fully paid;

2. Asian Construction and Development Corporation (ASIAKONSTRUCT) is further ordered to FURNISH COMFAC Corporation with the certificate of creditable withholding-tax-at-source for the amount of P56,986.35; andcralawlibrary

3. The award of attorney's fees and the costs of litigation is DELETED.

SO ORDERED.

Carpio, Carpio Morales, Tinga, and Velasco, Jr., JJ., concur.

Endnotes:

11 Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation, other than judicial costs, cannot be recovered, except:

(1) When exemplary damages are awarded;(2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest;(3) In criminal cases of malicious prosecution against the plaintiff;(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's plainly valid, just and demandable claim;(6) In actions for legal support;(7) In actions for the recovery of wages of household helpers, laborers and skilled workers;(8) In actions for indemnity under workmen's compensation and employer's liability laws;(9) In a separate civil action to recover civil liability arising from a crime;(10) When at least double judicial costs are awarded;

(11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered.In all cases, the attorney's fees and expenses of litigation must be reasonable.

105 [G.R. NO. 143338 July 29, 2005]

THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK), Petitioners, v. DEL MONTE MOTOR WORKS, INC., NARCISO G. MORALES,1 AND SPOUSE, Respondents.

D E C I S I O N

This is a Petition for Review on Certiorari of the Decision2 of the Court of Appeals in CA-G.R. CV No. 16886 entitled, "The Consolidated Bank & Trust Corporation (SOLIDBANK) v. Del Monte Motor Works, Inc., Narciso O. Morales and Spouse" promulgated on 25 November 1999 and of the Resolution of the appellate court dated 11 May 2000 denying petitioner's motion for reconsideration. Said decision and resolution affirmed the order dated 28 December 1987 of the Regional Trial Court (RTC), Branch 27, Manila.

The facts of the case are as follows:

On 13 June 1984, petitioner filed before the RTC of Manila a complaint3 for recovery of sum of money against respondents, impleading the spouse of respondent Narciso O. Morales (respondent Morales) in order to bind their conjugal partnership of gains. Petitioner, a domestic banking and trust corporation, alleges therein that on 23 April 1982, it extended in favor of respondents a loan in the amount of One Million Pesos (P1,000,000.00) as evidenced by a promissory note executed by respondents on the same date. Under the promissory note, respondents Del Monte Motor Works, Inc. (respondent corporation) and Morales bound themselves jointly and severally to pay petitioner the full amount of the loan through twenty-five monthly installments of P40,000.00 a month with interest pegged at 23% per annum. The note was to be paid in full by 23 May 1984. As respondents defaulted on their monthly installments, the full amount of the loan became due and demandable pursuant to the terms of the promissory note. Petitioner likewise alleges that it made oral and written demands upon respondents to settle their obligation but notwithstanding these demands, respondents still failed to pay their indebtedness which, as of 09 March 1984, stood at P1,332,474.55. Petitioner attached to its complaint as Annexes "A," "B," and "C," respectively, a photocopy of the promissory note supposedly executed by respondents, a copy of the demand letter it sent respondents dated 20 January 1983, and statement of account pertaining to respondents' loan.

On 31 October 1984, petitioner filed an Ex-Parte Motion to Declare the Defendants in Default which was opposed by the defendants upon the ground that they were never served with copies of the summons and of petitioner's complaint.

On 23 November 1984, respondent corporation filed before the trial court a manifestation attaching thereto its answer to petitioner's complaint which states the following:

2 - That it denies generally and specifically the allegations contained in paragraphs 3, 4, 5, 6, 7 and 8 thereof for lack of knowledge and information sufficient to form a belief as to the truth of the matters therein alleged, the truth being those alleged in the Special and Affirmative Defenses hereinbelow contained;

3 - ANSWERING FURTHER, and by way of a first special and affirmative defense, defendant herein states that the promissory note in question is void for want of valid consideration and/or there was no valuable consideration involved as defendant herein did not receive any consideration at all;

4 - ANSWERING FURTHER, and by way of a second special affirmative defense, defendant herein alleges that no demand has ever been sent to nor received by herein defendant and if ever demands were made, denies any liability as averred therein.

5 - ANSWERING FURTHER, and by way of a third special and affirmative defense, defendant herein avers that the complaint states no cause of action and has no basis either in fact or in law;'

VERIFICATION

I, JEANETTE D. TOLENTINO, of legal age, after having been duly sworn to in accordance with law, depose and state:

That I am the Controller of Del Monte Motor Works, Inc., one of the defendants in this case.

That for and in behalf of the defendant corporation, I caused the preparation of the above-narrated answer.

That I have read the contents thereof and they are true of my own knowledge.

(SGD) JEANNETTE D. TOLENTINO4

On 06 December 1984, respondent Morales filed his manifestation together with his answer wherein he likewise renounced any liability on the promissory note, thus:

1. He ADMIT[S] paragraphs 1, 2, and 3 of the complaint with a qualification in paragraph 3 thereof that he has long been separated from his wife and the system governing their property relations is that of complete separation of property and not that of conjugal partnership of gain[s];

2. He [DENIES], generally and specifically, the allegations contained in paragraphs 4, 5, 6, 7, and 8 thereof, for lack of knowledge and information sufficient to form a belief and as to the truth of the matter therein averred, the truth being those alleged in the Special And Affirmative Defenses hereinbelow pleaded;

SPECIAL AND AFFIRMATIVE DEFENSES

4. He has never signed the promissory note attached to the complaint in his personal and/or individual capacity as such;

5. That the said promissory note is ineffective, unenforceable and void for lack of valid consideration;

6. That even admitting, argumenti gratia, the validity and execution of the questioned promissory note, still, defendant herein cannot be bound personally and individually to the said obligations as banking procedures requires, it being a standard operating procedure of all known banking institution, that to hold a borrower jointly and severally liable in his official as well as personal capacity, the borrower must sign a Suretyship Agreement or at least, a continuing guarranty with that of the corporation he represent(s) but which in this case is wanting;

7. That transaction/obligation in question did not, in any way, redound/inure to the benefit of the conjugal partnership of gain, as there is no conjugal partnership of gain to speak with, defendant having long been separated from his wife and their property relation is governed by the system of complete separation of property, and more importantly, he has never signed the said promissory note in his personal and individual capacity as such;

VERIFICATION

That I, NARCISO MORALES, after having been duly sworn to in accordance with law, hereby depose and declare that:

I am one of the named defendant[s] in the above-entitled case;

I have cause[d] the preparation of the foregoing Answer upon facts and figures supplied by me to my retained counsel; have read each and every allegations contained therein and hereby certify that the same are true and correct of my own knowledge and information.

(SGD) NARCISO MORALES

Affiant5

On 26 December 1984, the trial court denied petitioner's motion to declare respondents in default and admitted their respective answers.6

During the trial on the merits of this case, petitioner presented as its sole witness, Liberato A. Lavarino (Lavarino), then the manager of its Collection Department. Substantially, Lavarino stated that respondents obtained the loan, subject of this case, from petitioner and due to respondents' failure to pay a single monthly installment on this loan, petitioner was constrained to send a demand letter to respondents; that as a result of this demand letter, Jeannette Tolentino (Tolentino), respondent corporation's controller, wrote a letter to petitioner requesting for some consideration because of the unfavorable business atmosphere then buffeting their business operation; that Tolentino enclosed to said letter a check with a face value of P220,020.00 to be discounted by petitioner with the proceeds being applied as partial payment to their company's obligation to petitioner; that after receipt of this partial payment, respondents' obligation again became stagnant prompting petitioner to serve respondents with another demand letter which, unfortunately, was unheeded by respondents. Lavarino also identified the following exhibits for petitioner: photocopy

of the duplicate original of the promissory note attached to the complaint as Exhibit 7 petitioner's 20 January 1983 demand letter marked as Exhibit 8 Tolentino's letter to petitioner dated 10 February 1983 and marked as Exhibit 9 and the 09 March 1984 statement of account sent to respondents marked as Exhibit 10

On 26 September 1985, petitioner made its formal offer of evidence. However, as the original copy of Exhibit "A" could no longer be found, petitioner instead sought the admission of the duplicate original of the promissory note which was

identified and marked as Exhibit "E."

The trial court initially admitted into evidence Exhibit "E" and granted respondents' motion that they be allowed to amend their respective answers to conform with this new evidence.11

On 30 September 1985, respondent corporation filed a manifestation and motion for reconsideration12 of the trial court's order admitting into evidence petitioner's Exhibit "E." Respondent corporation claims that Exhibit "E" should not have been admitted as it was immaterial, irrelevant, was not properly identified and hearsay evidence. Respondent corporation insists that Exhibit "E" was not properly identified by Lavarino who testified that he had nothing to do in the preparation and execution of petitioner's exhibits, one of which was Exhibit "E." Further, as there were markings in Exhibit "A" which were not contained in Exhibit "E," the latter could not possibly be considered an original copy of Exhibit "A." Lastly, respondent corporation claims that the exhibit in question had no bearing on the complaint as Lavarino admitted that Exhibit "E" was not the original of Exhibit "A" which was the foundation of the complaint and upon which respondent corporation based its own answer.

Respondent Morales similarly filed a manifestation with motion to reconsider order admitting as evidence Exhibit "E"13 which, other than insisting that the due execution and genuineness of the promissory note were not established as far as he was concerned, essentially raised the same arguments contained in respondent corporation's manifestation with motion for reconsideration referred to above.

On 06 December 1985, the trial court granted respondents' motions for reconsideration.14 Petitioner moved for the reconsideration of this order which was denied by the court a quo on 20 December 1985.15

On 26 December 1985, respondents separately filed their motions to dismiss on the similar ground that with the exclusion of Exhibits "A" and "E," petitioner no longer possessed any proof of respondents' alleged indebtedness.16

On 08 April 1986, petitioner filed a motion17 praying that the presiding judge, Judge Ricardo D. Diaz, of the court a quo inhibit himself from this case maintaining that the latter rushed into resolving its motion for reconsideration of the trial court's order of 06 December 1985 thereby depriving it the opportunity of presenting proof that the original of Exhibit "A" was delivered to respondents as early as 02 April 1983. Such haste on the part of the presiding judge, according to petitioner, cast doubt on his objectivity and fairness. This motion to inhibit was denied by the trial court on 06 August 1987.18

In an order dated 28 December 1987,19 the case before the trial court was dismissed, the dispositive portion of which reads:

WHEREFORE, the instant case against defendants Del Monte Motor Works, Inc. and Narciso O. Morales and spouse, is hereby DISMISSED, with costs against the plaintiff.

The trial court's finding was affirmed by the Court of Appeals in the assailed decision now before us. The dispositive portion of the appellate court's decision reads:

WHEREFORE, PREMISES CONSIDERED, the decision of the Regional Trial Court, Manila, Branch 27, dated December 28, 1987 dismissing plaintiff-appellant['s] complaint is hereby AFFIRMED. Cost against the plaintiff-appellant.20

Petitioner thereafter filed a motion for reconsideration dated 14 December 1999 which was denied for lack of merit in a resolution of the Court of Appeals promulgated on 11 May 2000.21

Aggrieved by the appellate court's ruling, petitioner now seeks redress from this Court imputing the following errors on the Court of Appeals:

I

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT FOUND THAT PRIVATE RESPONDENTS DENIED THE MATERIAL ALLEGATIONS OF PETITIONER SOLIDBANK'S COMPLAINT, DESPITE THE

PRESENCE OF INDUBITABLE FACTS CLEARLY POINTING TO THE FACT THAT SAID PRIVATE RESPONDENTS ADMITTED THE GENUINENESS AND DUE EXECUTION OF THE SUBJECT PROMISSORY NOTE.

II

THE HONORABLE COURT OF APPEALS GRAVELY ERRED WHEN IT UPHELD THE EXCLUSION OF EXHIBIT 'E', THE SECOND ORIGINAL OF THE PROMISSORY NOTE, DESPITE THE FACT THAT THE ORIGINAL OF EXHIBIT 'A' (XEROX COPY OF THE DUPLICATE ORIGINAL OF THE PROMISSORY NOTE) WAS ACTUALLY IN THE POSSESSION OF PRIVATE RESPONDENTS, THUS WARRANTING THE ADMISSION OF SECONDARY EVIDENCE.

III

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDING THAT THE TRIAL JUDGE SHOULD HAVE INHIBITED HIMSELF FROM TAKING COGNIZANCE OF AND FROM TRYING AND DECIDING THE INSTANT CASE CONSIDERING HIS PERCEIVED AND MANIFEST BIAS AND PARTIALITY IN FAVOR OF THE PRIVATE RESPONDENTS TO THE GRAVE PREJUDICE OF PETITIONER SOLIDBANK.22

The petition is meritorious.

In resolving the case against petitioner, the appellate court held that contrary to petitioner's stance, respondents were able to generally and specifically deny under oath the genuineness and due execution of the promissory note, thus:

There can be no dispute to the fact that the allegations in the answer (Record, p. 20, 26-27), of both defendants, they denied generally and specifically under oath the genuineness and due execution of the promissory note and by way of special and affirmative defenses herein states that he (MORALES) never signed the promissory note attached to the complaint (Exh. A) in his personal and/or individual capacity. Moreover, what appears in the record (Record, p. 20) was an admission of paragraphs 1 & 2 but they deny generally and specifically the rest of the allegations. It would be considered that there is a sufficient compliance of the requirement of the law for specific denial.23

We hold otherwise.

The pertinent portion of the Rules of Court on the matter provides:

SEC. 8. How to contest such documents. - When an action or defense is founded upon a written instrument, copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them and sets forth what he claims to be the facts; but the requirement of an oath does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for an inspection of the original instrument is refused.24

In the case of Permanent Savings and Loan Bank v. Mariano Velarde,25 this Court held that-

. . . Respondent also denied any liability on the promissory note as he allegedly did not receive the amount stated therein, and the loan documents do not express the true intention of the parties. Respondent reiterated these allegations in his "denial under oath," stating that the "promissory note sued upon, assuming that it exists and bears the genuine signature of herein defendant, the same does not bind him and that it did not truly express the real intention of the parties as stated in the defenses'

Respondent's denials do not constitute an effective specific denial as contemplated by law. In the early case of Songco v. Sellner,26 the Court expounded on how to deny the genuineness and due execution of an actionable document, viz.:

. . . This means that the defendant must declare under oath that he did not sign the document or that it is otherwise false or fabricated. Neither does the statement of the answer to the effect that the instrument was procured by fraudulent representation raise any issue as to its genuineness or due execution. On the contrary such a plea is an admission both of the genuineness and due execution thereof, since it seeks to avoid the instrument upon a ground not affecting either.27

In this case, both the court a quo and the Court of Appeals erred in ruling that respondents were able to specifically deny the allegations in petitioner's complaint in the manner specifically required by the rules. In effect, respondents had, to all intents and purposes, admitted the genuineness and due execution of the subject promissory note and recognized their obligation to petitioner.

The appellate court likewise sustained the ruling of the trial court that the "best evidence rule or primary evidence must be applied as the purpose of the proof is to establish the terms of the writing - meaning the alleged promissory note as it is the basis of the recovery of the money allegedly loaned to the defendants (respondents herein)."28

The "best evidence rule" is encapsulated in Rule 130, Section 3, of the Revised Rules of Civil Procedure which provides:

Sec. 3. Original document must be produced; exceptions. - When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; andcralawlibrary

(d) When the original is a public record in the custody of a public officer or is recorded in a public office.

The "best evidence rule," according to Professor Thayer, first appeared in the year 1699-1700 when in one case involving a goldsmith, Holt, C. J., was quoted as stating that they should take into consideration the usages of trade and that "the best proof that the nature of the thing will afford is only required."29 Over the years, the phrase was used to describe rules which were already existing such as the rule that the terms of a document must be proved by the production of the document itself, in preference to evidence about the document; it was also utilized to designate the hearsay rule or the rule excluding assertions made out of court and not subject to the rigors of cross-examination; and the phrase was likewise used to designate the group of rules by which testimony of particular classes of witnesses was preferred to that of others.30

According to McCormick, an authority on the rules of evidence, "the only actual rule that the 'best evidence' phrase denotes today is the rule requiring the production of the original writing"31 the rationale being:

(1) that precision in presenting to the court the exact words of the writing is of more than average importance, particularly as respects operative or dispositive instruments, such as deeds, wills and contracts, since a slight variation in words may mean a great difference in rights, (2) that there is a substantial hazard of inaccuracy in the human process of making a copy by handwriting or typewriting, and (3) as respects oral testimony purporting to give from memory the terms of a writing, there is a special risk of error, greater than in the case of attempts at describing other situations generally. In the light of these dangers of mistransmission, accompanying the use of written copies or of recollection, largely avoided through proving the terms by presenting the writing itself, the preference for the original writing is justified.32

Bearing in mind that the risk of mistransmission of the contents of a writing is the justification for the "best evidence rule," we declare that this rule finds no application to this case. It should be noted that respondents never disputed the terms and conditions of the promissory note thus leaving us to conclude that as far as the parties herein are concerned, the wording or content of said note is clear enough and leaves no room for disagreement. In their responsive pleadings, respondents' principal defense rests on the alleged lack of consideration of the promissory note. In addition, respondent Morales also claims that he did not sign the note in his personal capacity. These contentions clearly do not question the "precise wording"33 of the promissory note which should have paved the way for the application of the "best evidence rule." It was, therefore, an error for the Court of Appeals to sustain the decision of the trial court on this point.

Besides, the "best evidence rule" as stated in our Revised Rules of Civil Procedure is not absolute. As quoted earlier, the rule accepts of exceptions one of which is when the original of the subject document is in the possession of the adverse party. As pointed out by petitioner in its motion to inhibit, had it been given the opportunity by the court a quo, it would have sufficiently established that the original of Exhibit "A" was in the possession of respondents which would have called into application one of the exceptions to the "best evidence rule."

Significantly, and as discussed earlier, respondents failed to deny specifically the execution of the promissory note. This being the case, there was no need for petitioner to present the original of the promissory note in question. Their judicial admission with respect to the genuineness and execution of the promissory note sufficiently established their liability to petitioner regardless of the fact that petitioner failed to present the original of said note.34

Indeed, when the defendant fails to deny specifically and under oath the due execution and genuineness of a document copied in a complaint, the plaintiff need not prove that fact as it is considered admitted by the defendant.35 In the case of Asia Banking Corporation v. Walter E. Olsen & Co.,36 this Court held that -

Another error assigned by the appellant is the fact that the lower court took into consideration the documents attached to the complaint as a part thereof, without having been expressly introduced in evidence. This was no error. In the answer of the defendants there was no denial under oath of the authenticity of these documents. Under Section 103 of the Code of Civil Procedure, the authenticity and due execution of these documents must, in that case, be deemed admitted. The effect of this is to relieve the plaintiff from the duty of expressly presenting such documents as evidence. The court, for the proper decision of the case, may and should consider, without the introduction of evidence, the facts admitted by the parties.37

Anent petitioner's allegation that the presiding judge of the court a quo should have inhibited himself from this case, we resolve this issue against petitioner.

In order for this Court to sustain a charge of partiality and prejudice brought against a judge, there must be convincing proof to show that he or she is, indeed, biased and partial. Bare allegations are not enough. Bias and prejudice are serious charges which cannot be presumed particularly if weighed against a judge's sacred obligation under his oath of office to administer justice without respect to person and do equal right to the poor and the rich.38 There must be a showing of bias and prejudice stemming from an extrajudicial source resulting in an opinion in the merits on some basis other than what the judge learned from his participation in the case.39

In this case, as petitioner failed to proffer any evidence indicating that Judge Diaz was guilty of bias and prejudice, we affirm the Court of Appeals' holding that there was no cogent reason for him to disqualify himself from this case.

Finally, Rule 33, Section 1, of the Revised Rules of Civil Procedure states the rule on the effect of judgment on demurrer to evidence. It reads:

SECTION 1. Demurrer to evidence. - After the plaintiff has completed the presentation of his evidence, the defendant may move for dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. If his motion is denied, he shall have the right to present evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be deemed to have waived the right to present evidence.

A demurrer to evidence abbreviates judicial proceedings, it being an instrument for the expeditious termination of an action. Caution, however, must be exercised by the party seeking the dismissal of a case upon this ground as under the rules, if the movant's plea for the dismissal on demurrer to evidence is granted and the order of dismissal is reversed on appeal, he loses his right to adduce evidence. If the defendant's motion for judgment on demurrer to evidence is granted and the order is subsequently reversed on appeal, judgment is rendered in favor of the adverse party because the movant loses his right to present evidence.40 The reviewing court cannot remand the case for further proceedings; rather, it should render judgment on the basis of the evidence presented by the plaintiff.41

Under the promissory note executed by respondents in this case, they are obligated to petitioner in the amount of One Million Pesos, this being the amount of loan they obtained on 23 April 1982. In addition, they also bound themselves to pay the 23% interest per annum on the loan; and a penalty charge of 3% per annum on the amount due until fully paid. Respondents likewise agreed to pay attorney's fees equivalent to 10% of the total amount due, but in no case less than P200.00, plus costs of suit with both these amounts bearing a 1% interest per month until paid. Costs against respondents.

WHEREFORE, premises considered, the Court of Appeals' decision dated 25 November 1999 as well as its Resolution of 11 May 2000, affirming the order of the Regional Trial Court, Manila, Branch 27, dated 28 December 1987, are hereby REVERSED and SET ASIDE. Respondents are ordered to pay One Million Pesos (P1,000,000.00) plus 23% interest per annum, penalty charge of 3% interest per annum, and 10% of the amount due as attorney's fees together with a 1% interest per month until fully paid. The sum of P220,020.00 which was the value of the postdated check given

by respondents to petitioner as partial payment should be deducted from the amount due from respondents.

SO ORDERED.

Puno, J., (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

Endnotes:

24 Rule 8, Section 8, Revised Rules of Civil Procedure.29 IV Evidence in Trials at Common Law, John Henry Wigmore, p. 399 (1972 Ed.).35 VII The Revised Rules of Court in the Philippines (Evidence), Vicente J. Francisco, p. 9 (1997 Ed.)

110 [A.M. NO. CA-05-20-P. September 9, 2005]

(Formerly OCA IPI No. 05-81-CA-P)

ASSOCIATE JUSTICE DELILAH VIDALLON-MAGTOLIS, COURT OF APPEALS, Complainant,* v. CIELITO M. SALUD, CLERK IV, COURT OF APPEALS, Respondent.

D E C I S I O N

Cielito Salud, Clerk IV, Mailing Section of the Judicial Records Division, Court of Appeals (CA) stands charged with the following offenses:

1. Inefficiency and incompetence in the performance of official duties;

2. Conduct grossly prejudicial to the best interest of the service; andcralawlibrary

3. Directly or indirectly having financial and material interest in an official transaction, under Section 22, paragraphs (p), (t) and (u), Rule XIV of the Omnibus Rules Implementing the Civil Service Law.1

The Facts

Melchor Lagua was found guilty of homicide in Criminal Case Nos. 118032-H and 118033-H before the Regional Trial Court of Pasig City, Branch 163.2 On appeal, the case was assigned to the Sixth Division of the Court of Appeals, docketed as CA-G.R. CR No. 27423. Lagua, who was then detained at the Bureau of Prisons National Penitentiary in Muntinlupa City, filed a Very Urgent Petition for Bail. Finding the petition well-taken, the appellate court issued a Resolution on October 9, 2003, directing him to post a P200,000.00 bond.

Lagua's bond was approved in a Resolution3 dated November 6, 2003, where the appellate court also directed the issuance of an order of release in favor of Lagua. The resolution was then brought to the Office of the Division Clerk of Court, Atty. Maria Isabel M. Pattugalan-Madarang, for promulgation.

Irma Del Rosario, Utility Worker, noticed the respondent's unusual interest in the Lagua case. The respondent had apparently been making inquiries whether the appellate court had already directed the issuance of an order of release in the said case and was initially told there was none yet. Due to his persistence, the records of the case were eventually found.4 Atty. Madarang then directed the typing of the Order of Release Upon Bond,5 and to notify the mailing section that there were orders requiring personal service.6 At around 4:00 p.m., the respondent then went to Atty. Madarang's office and assisted in arranging and stapling the papers for release. He brought the said resolutions and other papers himself to the Mailing Section.7

On November 7, 2003, the respondent went to the National Penitentiary to serve the resolution and order of release in the Lagua case. The respondent left the prison compound at around 2:30 p.m.8

In the meantime, Atty. Madarang received a telephone call from a certain Melissa Melchor, who introduced herself as Lagua's relative. It was about 2:00 p.m. The caller asked her how much more they had to give to facilitate Lagua's provisional liberty. The caller also told Atty. Madarang that they had sought the help of a certain Rhodora Valdez of the Regional Trial Court (RTC) of Pasig, where the criminal case originated, but were told that they still had a balance to be given to Justice Magtolis and Atty. Madarang through the respondent. Atty. Madarang then called the said court and asked to speak to Ms. Valdez, pretending to be Lagua's relative.

What transpired thereafter is contained in Atty. Madarang's Affidavit dated December 8, 2003, as follows:

4. That upon telephone queries made with the office of the Clerk of Court of RTC Pasig, I learned that Rhodora Valdez is the incumbent Process Server of RTC, [Branch] 163, Pasig City, from which the original case against accused-appellant Lagua originated. Disguising myself as accused-appellant Lagua's relative, I dialed [Branch] 163, RTC, Pasig (6314273) but Rhodora Valdez did not report for work that day, according to Baby (also known as Ester), her officemate (who) answered my call. She added that Rhodora Valdez has been waiting for us (Lagua's relatives) to call. Her exact words were these: "Wala si Rhodora. Meron lang siyang nilakad. Pero kahapon pa nya hinihintay ang tawag nyo. May kulang pa kayo eh. Kailangan kasing i-en banc sa Court of Appeals ang kaso ni Lagua."

5. That I coordinated with Ms. Cecil Secarro, the Acting Chief of the Mailing Section, to inquire if it was usual/normal for her to text her process servers on the field for an update of their deliveries, to which she answered in the affirmative. While she was in the office, she texted Salud for his whereabouts and he replied, that he was on his way back to Quezon City. That was before 4 p.m., adding that his deliveries were ok.

6. That I got Salud's mobile phone number from Ms. Secarro and started texting him at about the same time Ms. Secarro did. I represented myself as Arlyn, Lagua's relative. Most of his text messages are still stored in my mobile phone. In fact, I received one text message from him while I was at the office of Justice Magtolis, (the Chairman of the 6th Division and the ponente of C.R. No. 27423) in the late afternoon of November 7, 2003 while reporting to her this incident. Those stored in my phone are the following:

1. bkit, C rhodora to. 639204439082. 'Nov. 2003, 15:36:15

2. CNO KAMAGANAK AT ANONG PANGALAN MO - 639204439082, 7 Nov 2003 16:14:47

3. SINO K KC NAGHIWALAY N KAMI - 639204439082, 7 Nov 2003 16:40:21

4. TAWAG K S AKIN - 639204439082 - 7 Nov 2003 17:18:47

5. NARELEASE N C MR. LAGUA. NAGKITA N B KAYO - 639204439082-7 Nov 2003 19:44:52

6. Magkano b and binigay nyo sa middle nyo. Puede bang malaman - 639184470111-7 Nov 2003 20:32:05

7. Gud evening. May gusto lng akong malaman. Sana alang makaalam kahit cino. Lito - 639184470111 7 Nov. 2003 19:54:20

8. Cno ang kausap n Rhodora. Pwede bang malaman - 639184470111-7 Nov 2003 20:37:57

9. May landline ka. Tawagan kta bukas nang umaga - 639184470111-7 Nov 2003 20:56:31

10. Wag s Court of Appeal. Txt na lang kta kung saan. '639184470111-7 Nov 2003 20:52:58

11. Gusto mo bukas nang umaga magkita tyo. 639184470111 - 7 Nov 2003 20:57:10

12. D ba pwede bukas tyo kita. May gusto lang ako malaman - 639184470111 7 Nov 2003 21:02:41

13. D 2ngkol kay rhodora duon sa kasama ko kaninang lalakeng pinsan - 639184470111 - 7 Nov 2003, 21:04:28

14. Ala po ako sa Lunes sa opis. Sa hapon po puede kyo - 639184470111, 7 Nov 2003 21:07:23

15. Kay Melchor Lagua 639184470111 - 7 Nov 2003 21:08:19

16. Kasama ko cya kanina nang lumabas - 639184470111 - 7 Nov. 2003 21:13:05

17. Ano m ba Melchor Lagua - 639184470111 - 7 Nov 2003 21:15:52

18. Between 5 and 5:30 ng hapon. Bkit. 639184470111 - 7 Nov. 2003 21:54:24

19. 3 PM PUWEDE KB - 639004039082 10 Nov 2003 12:09:32

20. Kilala mo b c rhodora. Nagkita na b kayo. Ala naman problema sa kanya. Ok naman 639184470111 - 7 Nov 2003, 21:57:13

21. MAGKITA N LANG TAYO - 639204439082 - 10 Nov. 2003, 12:20:16

22. A, OK, NAGKITA N B KAYO NG KAMAGANAK MO - 639204439082 - 10 Nov 2003 15:12:14

23. D TALAGA AKO DARATING DAHIL WALA AKONG KAILANGAN S IYO. '639204439082 - 10 Nov 2003 18:36:03

7. That Salud called me up in the morning of November 8, 2003 at around 7:33 but I purposely did not answer him. Why did he need to call me up?cralawlibrary

8. That I personally called up the Bureau of Prisons for the exact time the Order of Release was delivered and when accused appellant Lagua was released. I learned that the Order of Release was received at 9:15 A.M. and that Lagua was released between 5-5:30 P.M. of November 7, 2003.

9. That I was able to talk to Rhodora Valdez the following Monday, November 10, 2003. Again, I introduced myself as Lagua's relative, Arlyn and told her I only wanted to know how much more we had to pay for Lagua's release. She refused to entertain me because according to her, "Hindi ikaw ang kausap ko. Duda ako sa yo. Kung gusto mo, puntahan mo ako dito bukas, para magkita tayo. Pero lumabas na si Lagua. Itinawag sa akin ni Lito Salud." Then, she [hung] up.

10. That on Tuesday, November 11, 2003, I brought Salud, accompanied by Ms. Secarro to Justice Magtolis. Out of the confrontation, we discovered that Salud did not properly serve the copies of the Resolution and Order of Release upon the accused-appellant and his counsel, Atty. Salvador C. Quimpo of the Quimpo Dingayan-Quimpo and Associates. He gave them to a certain Art, allegedly Lagua's relative who he claimed approached him at the Bureau of Prisons in the morning of November 7, 2003. He told Justice Magtolis that he gave these documents to Art, who promised to take care of them, even before he could deliver the copy addressed to the Director of Prisons. He never mentioned that this Art was connected with the office of accused-appellant's counsel. Because of this information from Salud himself, I did not sign the Certificate of Service, Annex "C".

11. That several days later, Salud accompanied by Ms. Secarro, came to my office to apologize. But before he could even say a word, he broke down in [wails]. In between his loud cries, he uttered, "Boss, patawad po, alang-alang sa aking mga anak."9

On November 11, 2003, Justice Magtolis called the respondent to her office. When confronted, the respondent denied extorting or receiving money for Lagua's release, or in any other case. He, however, admitted serving the copies of resolution and order of release intended for Lagua and his counsel to Art Baluran.10 Justice Magtolis then called the respondent to a meeting with Clerk of Court Atty. Tessie L. Gatmaitan, who stated that she would transfer the respondent to another office which has nothing to do with cases.

Justice Magtolis lodged the complaint against the respondent in a Letter dated November 14, 2003, containing, among others, the following allegations:

The delivery of resolutions/orders to unauthorized persons and "complete strangers" who promised to "take care thereof" ("siya na raw ang bahala") constitutes not only neglect of duty but also conduct prejudicial to the best interest of the service. Staying for the whole day within the vicinity of the National Bilibid Prisons to the point of failing to fulfill his other duties for the day constitutes inefficiency and incompetence in the performance of official duties. On the other hand, the use of my name and that of our Division Clerk of Court to illegally solicit financial or material benefit from parties with pending cases before this Court is illegal per se.

In view of the foregoing, it is respectfully requested that Cielito Salud be subjected to an administrative investigation and disciplinary action.11

Attached to the complaint were the following documents to support the charges:

ANNEX "A" - Record of the cases received by Salud on November 6, 2003 for delivery/service the following day, November 7, 2003. Please note that in each of the 3 cases assigned to him, there are several parties/counsels to be served.

ANNEX "B" - Certificate of Service signed by Salud, attested by the Acting Chief of the Mailing Section and Division Clerk of Court Ma. Ramona L. Ledesma, showing that the parties/counsel in SP-67586 were served only on November 10, 2003 (not on November 7, 2003).

ANNEX "C" - Certificate of Service for CR-27423, and corresponding Delivery Receipts.

"C-1" - Delivery Receipts for Defense Counsel Salvador Quimpo signed by someone whose signature was identified by Salud [as] "Art" - a cousin of appellant Melchor Lagua.

"C-2" - Delivery Receipt for the accused-appellant, received by the same "Art" and not served thru the Director of Prisons.

"C-3" - Delivery Receipt for the OSG, showing that it was delivered/received by the said office on November 10, 2003, not on November 7, 2003.

"C-4" - Delivery Receipt for the Director of Prisons showing receipt on November 7, 2003.

ANNEX "D" - Record of Resolutions in 3 other cases (SP-80241, SP-65404 and SP-77957) received for service by Salud on November 10, 2003. The resolutions/processes in these 3 cases were delivered/served to the parties/counsel on November 10, 2003 together with undelivered resolutions left unserved/undelivered on November 7, 2003.

ANNEX "E" - Certification signed by Salud showing service to parties/counsel in SP-65404 (received by Salud on November 10, 2003) on November 10, 2003 (same date)

ANNEX "F", "F-1" & "F-2" - Delivery Receipts for parties/counsel in SP-65404, showing service/delivery on November 10, 2003 - in contrast to his minimal delivery/services on November 7, 2003 only in Muntinlupa.

ANNEX "G" - Copy of the resolution dated November 6, 2003 of the 6th Division approving the appellant's bond and directing the issuance of an order of release.

ANNEX "H" - Copy of the Order of Release upon Bond, which Salud was supposed to deliver, among others on November 7, 2003 to the defense counsel, the appellant and the OSG.12

In his counter-affidavit,13 the respondent vehemently denied the charges. He never demanded money from Lagua's relative; his name had been used by someone and was, thus, a mere victim of the circumstances. Moreover, the fact that he immediately released the CA order in question was clear proof that he had no financial interest in the transaction. His version of the events that occurred that day is as follows:

4.1 That on November 6, 2003 at around 1:38 p.m. the Acting Chief of the Mailing Section gave me an assignment to deliver the Writ of Habeas Corpus (hearing on November 26, 2003 at RTC, Zamboanga) for CA-G.R. SP No. 80238 for delivery to NBI, PAO, Quezon City, Muntinlupa;

4.2 That I delivered a copy of the Writ of Habeas Corpus to [the National] Bureau of Investigation (NBI);

4.3 That while I was at the NBI, I received a text message from my boss, requesting me to return to the office immediately because there is another notice of resolution coming from Atty. Ledesma which I have to serve to Quezon City and Las Piñas;

4.4 In compliance with the request, I returned to the Office and arrived at around 3:15 p.m.;

4.5 That when I received the resolution, I read the same and found out that the hearing is still scheduled on December 10, 2003 at 10:30 a.m.;

4.6 That when I was about to leave to deliver the Writ of Habeas Corpus and the Notice of Hearing to the PAO, Quezon City, my officemate Jun Vicencio told me to wait because Irma, the staff of Atty. Madarang requested me to standby because I need to deliver the Order of Release to the New Bilibid Prison, Muntinlupa;

4.7 That because of the request I waited until 4:00 p.m.;

4.8 That because its already late, I decided to go to Atty. Madarang's office to inquire about the Order of Release which I need to deliver to the New Bilibid Prison, Muntinlupa;

4.9 That Atty. Madarang told me to wait a little while because the order is about to be finished. So I waited.

4.10 That Atty. Madarang gave to me the Order of Release at 4:15 p.m.

4.11 That because I am aware that I may not reach [the] New Bilibid Prison on time, I told Atty. Madarang that I can deliver it on November 7, 2003, early in the morning. She agreed and told me "THANK YOU" Ikaw na ang bahala;

4.12 That I informed my boss about the Order of Release that was assigned to me and she had it listed in our logbook. I asked my boss [Cecil Secarro] if I can deliver the Notice of Hearing for SP 67586 and the others on Monday if I cannot finish delivering them on November 7, 2003. She agreed but told me to be sure that the Order of Release will be served first and the others be served not later than Monday, November 10, 2003. Thereafter, I went home.

4.13 That on November 7, 2003, I went straight to [the] New Bilibid Prison and arrived there before 8:00 [a.m.] Unfortunately, all the staff wearing white uniforms and the security guards were falling in line in front of the building of the New Bilibid Prison. So I could not enter the administration office.

4.14 That while I was standing in front of the building where the administrative office is located, a certain ART approached me and asked me if I am the personnel of the Court of Appeals who will deliver the Order of Release.

4.15 That I said yes, and he told me his name and said that he is a relative of MELCHOR LAGUA (prisoner) and is connected with the office of Atty. [Quimpo].

4.16 That at around 9:30 [a.m.] I was able to enter the administrative offices but because there was no staff inside - I went to the documentation office. The staff in the documentation office told me to submit the Order of Release to the administrative office. He said that they will prepare the documents of MELCHOR LAGUA (prisoner) but also told me that the prisoner might be released on Monday yet because the signatories are busy attending the ongoing 98 anniversary celebration;

4.17 That I returned to the administrative office and was able to find Mr. JUANITO TORRES, Administrative Officer III, who received the copy for the Director but refused to receive the copy of Mr. LAGUA. He told me to wait for his staff to receive the copy of Mr. LAGUA;

4.18 That because the staff were not around, I went to the canteen to buy softdrinks to quench my thirst;

4.19 That Mr. ART followed me in the canteen and told me to assist in the release of Mr. LAGUA because there were no personnel attending to the Order of Release;

4.20 That since my boss told me to insure the release of the prisoner, I waited for my staff to arrive who will attend to the matter;

4.21 That I delivered the copy of Mr. LAGUA to the staff. But ART told them he can receive the copy of Mr. LAGUA because he is his relative so, the staff told me to give the copy to ART.

4.22 That I gave the copy of the Order of Release for the accused to ART. ART also told me that he is authorized to receive the copy for Atty. Quimpo because he is also the representative of the law office. Hence, I also gave the copy for Atty. Quimpo to ART;

4.23 That I was able to finish my duty at the New Bilibid Prison at around 2:30 [p.m.] and I proceeded to Purok I, 6A Bayanan, Muntinlupa to serve the Writ of Habeas Corpus in CA-G.R. SP No. 80238;

4.24 That because of [sic] the address of the addressee was incomplete, I found a hard time locating the address of the addressee and when I found Purok I, 6A, the persons thereat do not know JOEL DE LA PAZ. I asked for their help but nobody in the place knew JOEL DE LA PAZ;

4.25 That I left Muntinlupa late in the afternoon and due to the lack of time I decided to deliver the other documents on the next working day which is Monday, November 10, 2003;

4.26 That I delivered the other documents on Monday, November 10, 2003, without any problem;

4.27 That I was surprised when Atty. Madarang later on accused me that I used her name and the name of Justice Magtolis to demand money from Mr. LAGUA'S relative.14

Considering the gravity of the charges, then Acting Presiding Justice Cancio C. Garcia15 referred the matter to Atty. Elisa B. Pilar-Longalong, Assistant Clerk of Court, for investigation, report, and recommendation.

The Investigation

The requisite hearings were held from December 12, 2003 to August 4, 2004.

Atty. Madarang affirmed the contents of her Affidavit16 dated December 8, 2003. She testified that the respondent later came to her office along with Ms. Secarro. Amidst his cries, he pleaded, "Boss, patawad po, alang-alang sa aking mga anak." She replied, "Wait, wala ka namang kasalanan sa akin. Ikaw ang nagpasimuno ng lahat ng ito." The respondent repeated, "Boss, patawad po alang alang sa aking mga anak," and Atty. Madarang answered, "Okey lang, pinatawad na kita. Hindi naman ako galit sa iyo."17

Justice Magtolis testified that Atty. Madarang reported having received a telephone call from the alleged relative of Lagua. She narrated that she gave the name "Arlyn" to the caller, and, thereafter, exchanged text messages with the respondent. Justice Magtolis instructed Atty. Madarang to continue communicating with the respondent and, if possible, to see it through a possible pay-off where a National Bureau of Investigation (NBI) agent would be asked to assist them. However, the entrapment did not materialize. The respondent thereafter came to her office, where he was asked why he was unable to serve all the other papers and documents that day.18 He also admitted that he served a copy of the resolution to the wrong person (Baluran). Justice Magtolis also stated that she threatened to transfer the respondent, and that the latter vehemently objected, pleaded, and cried saying, "Huwag naman pong pa-transfer." When asked why, the respondent said that he has children in school and something like, "Dyan po ako kumikita."19

Another witness was Cristy Flores, convicted of three counts of estafa who served time at the Correctional Institute for Women in Batangas City. She testified that the respondent was introduced to her in December 1998 by a certain Crisanta Gamil.20 Gamil was also detained at the correctional facility; the respondent had worked on her appeal bond papers and asked for P20,000.00 to facilitate the issuance of the appeal bond.21 The payment was made right in front of her, and the respondent issued a receipt.22 The witness also testified that Gamil told her, "O, at least dyan mo ipalakad ang papel mo. Okay ′yan, sigurado."23 The respondent visited her in May 1999, as she had asked him to fix her appeal bond. During the visit, the respondent took the pertinent documents from her.24 The witness also stated that she gave the respondent a partial payment of P7,000.0025 on May 16, 1999 and he issued a receipt.26 They then proceeded to the Documents Section where they secured copies of the court decision, certificate of manifestation and her picture. She made the last payment of P13,000.00 in June 13, 1999, and also issued a receipt. The respondent was also asking for an additional payment of P15,000.00, which she was unable to give.

Flores narrated that she introduced another detainee to the respondent, Dalawangbayan, whom the latter was also able to "help". She stated that according to Dalawangbayan, the respondent asked for P200,000.00. She further testified that she knew the respondent as Joselito M. Salud, and not Cielito Salud.27 After the incident, she wrote a letter to Associate Justice Conrado Vasquez, Jr. to ask for assistance regarding her appeal bond.

Atty. Salvador Quimpo, Lagua's counsel, testified that it was Engineer Art Baluran who hired him as counsel of the said accused. He stated that he gave an oral authorization to Baluran to get the CA resolutions or orders; Baluran was the one who furnished him a copy of the resolution.28 He called Mr. Baluran to say that an order for Lagua's release had already been issued by the appellate court. The witness stated, however, that he had never seen the respondent before.29

The respondent testified that he has been a CA employee since 1991. He admitted that he knew Flores, and met her in January 1999 when he brought Gamil's order of release in the Batangas City Jail. He claimed that he was waiting for the relatives of Gamil as they were the ones who would pay for his fare home, and while waiting, he talked to the jailguard/warden. Flores then approached him and asked him if he was from the CA. When the respondent answered in the affirmative, Flores replied that Justice Vasquez was her neighbor in Biñan, Laguna.

The respondent admitted that he was in the Correctional Institute for Women in Mandaluyong City on May 16, 1999, as he was then visiting Vilma Dalawangbayan. He also saw Flores.30 When asked why he visited Dalawangbayan, the respondent replied that Flores had written a letter to him (which he dubbed as "maintrigang sulat")31 addressed "Lito Salud, Mailing Section, Court of Appeals." In the said letter, Flores asked him to help Dalawangbayan, just like he had helped Gamil. The respondent then showed the letter to then Chief of Office Prudencio B. Aguilar, who told him, "Puntahan mo yan, Lito at maintriga ′yang sulat na 'yan, baka tayo mapahamak dyan."32 Thus, he went to the Correctional Institute in Mandaluyong City to "sort things out" with Dalawangbayan and Gamil. The respondent, however, stated that he could not find the letter anywhere and had already been lost.33

During his May 16, 1999 visit to the correctional facility, Flores approached him in the visiting hall, and said suddenly, "Sandali lang, Kuya," then left. He then talked to Dalawangbayan about the "controversial" letter, explaining that his job in the Court of Appeals was only to remand the records and deliver the Orders for release, just like what he did in Gamil's case.34 He again visited Dalawangbayan on June 13, 199935 as evidenced by the entries in the visitor's logbook. He was no longer able to speak to Flores, but made five other such visits to Dalawangbayan in the correctional facility.

The Findings of the Investigating Officer

In her Report dated January 21, 2005, Atty. Longalong found that the respondent was guilty as charged, and made the following recommendation:

In view of all the foregoing, there is substantial evidence to hold respondent liable for the offenses charged. He is liable for inefficiency and incompetence in the performance of his official duties and for conduct prejudicial to the best interest of the service when he admittedly served the copies of the resolution and order of release in the Lagua case intended for detained appellant and his counsel on Mr. Baluran whom he admitted to have met only on that day,

against the rules and normal office procedure on personal service. His long stay in the Bureau of Prisons also caused the delay in the service of other court processes assigned to him for service on that day. He is also liable for having financial or material interest in an official transaction considering his undue interest in the service of the order of release and actual release of Lagua to the point of staying almost the whole day in the Bureau of Prisons and the aborted "deal" as can be concluded from the phone call of Melissa Melchor to Atty. Madarang and subsequent exchange of text messages with Atty. Madarang disguising as Lagua's relative.'

RECOMMENDATION:

1. Rule IV, Section 52 of Civil Service Commission Memorandum Circular No. 19, S. 1999, issued pursuant to Book V of the Administrative Code of 1987, provides that the penalty for the first offense of inefficiency and incompetence in the performance of official duties, for conduct prejudicial to the best interest of the service and for directly or indirectly having financial and material interest in any official transaction is suspension for a period of 6 months, 1 day to 1 year. Pursuant to Section 55 of the same Memorandum Circular, if the respondent is found guilty of 2 or more charges, the penalty to be imposed should be that corresponding to the most serious charge and the rest shall be considered as aggravating circumstances. Section 54-c of the same Memorandum Circular provides that the maximum of the penalty shall be imposed where only aggravating and no mitigating circumstances are present. Since in this case, the penalty is the same for all 3 offenses, the maximum of the penalty for the first offense which is suspension for 1 year [may be] imposed on the respondent.

2. Considering that the prescribed penalty for the offense exceeds one month suspension, the case may now be referred to the Supreme Court for appropriate action, pursuant to Circular No. 30-91 of the Office of the Court Administrator.36

The Ruling of the Court

On the charge of inefficiency, the respondent is clearly administratively liable. After serving Lagua's copy of the resolution and order of release to the prison Director, he should have immediately returned to his station or served the other resolutions and documents for personal service. As an officer of the court, the respondent plays an essential part in the administration of justice. He is required to live up to the stringent standards of his office, and his conduct must, at all times, be above reproach and suspicion. He must steer clear of any act which would tend to undermine his integrity, or erode somehow the people's faith and trust in the courts.37 As the respondent himself admitted, he stayed on until 2:30 p.m. without any valid reason, despite the fact that he knew he still had to serve several orders and resolutions. As pointed out by the Investigating Officer, "inefficiency and incompetence in the performance of official duties" is classified as a grave offense, and is punishable by suspension for six months and one day to one year.38

Indeed, the complainant in administrative proceedings has the burden of proving the allegations in the complaint by substantial evidence. If a court employee is to be disciplined for a grave offense, the evidence against him must be competent and derived from direct knowledge; as such, charges based on mere suspicion and speculation cannot be given credence. Thus, if the complainant fails to substantiate a claim of corruption and bribery, relying on mere conjectures and suppositions, the administrative complaint must be dismissed for lack of merit.39 However, in administrative proceedings, the quantum of proof required to establish malfeasance is not proof beyond reasonable doubt but substantial evidence, i.e., that amount of relevant evidence that a reasonable mind might accept as adequate to support a conclusion, is required.40 The findings of investigating magistrates on the credibility of witnesses are given great weight by reason of their unmatched opportunity to see the deportment of the witnesses as they testified.41

To determine the credibility and probative weight of the testimony of a witness, such testimony must be considered in its entirety and not in truncated parts. To determine which contradicting statements of a witness is to prevail as to the truth, the other evidence received must be considered.42 Thus, while it is true that there is no direct evidence that the respondent received any money to "facilitate" the release of detained Lagua, the following circumstances must be taken as contrary to the respondent's plea of innocence:

First. The respondent admitted that he was the sender of the first three text messages in Atty. Madarang's cellphone: "bkit, C rhodora to"; "CNO KAMAGANAK AT ANONG PANGALAN MO"; and "SINO K KC NAGHIWALAY N KAMI." The respondent's testimony on the matter is as follows:

Q: In the hearing of December 2, 2003, in the TSN on page 32 onwards'

ATTY. ROSERO:

Is that the testimony of Atty. Madarang, Justice?cralawlibrary

JUSTICE MAGTOLIS:

Oo. I will just refer to your admission through your counsel that Cellphone No. 6392044390[8]2 is yours. You admitted that?cralawlibrary

ATTY. ROSERO:

I think we made an admission as to that matter, Justice. We ll just check the affidavit of Atty. Madarang.

JUSTICE MAGTOLIS:

Here, admitted. Basahin mo.

ATTY. ROSERO:

Yes, Justice, admitted but not the cellphone number'

JUSTICE MAGTOLIS:

Sige, ulitin natin, 6392044390[9]2.

ATTY. ROSERO:

Yes, admitted. That is his cellphone.

JUSTICE MAGTOLIS:

This cellphone is yours.

Q: Do you also admit that you called Atty. Madarang several times on November 7, 2003?cralawlibrary

ATTY. ROSERO:

November 7 is' a Friday. Tumawag ka daw several times kay Atty. Madarang, November 7?cralawlibrary

JUSTICE MAGTOLIS:

Texted, I m sorry I will correct that, texted.

A: Nauna po siyang magtext sa akin, Justice, hindi po ako nagtext sa kanya. Nagtext po siya sa akin sumagot po ako sa kanya.

Q: There was an exchange several times?cralawlibrary

A: Nuong pong text niya sa akin - hindi po several times dahil - kung makita ′nyo po dyan.

JUSTICE MAGTOLIS:

Let me see the affidavit of Atty. Madarang. After this question, may I ask for a continuance?cralawlibrary

ATTY. ROSERO:

No objection, Your Honor.

JUSTICE MAGTOLIS:

All these text messages were checked by us with your counsel in the cellphone of Atty. Madarang which were preserved until we allowed her to erase these. There are exchanges here: 6392044390[8]2, November 7. When she texted she answered, "Bkit c Rhodora 2" and then second was, "Cnong kamaganak anong pangalan mo?" This is addressed to you, this is your telephone?cralawlibrary

A: Opo.

Q: But the one who answered is Rhodora?cralawlibrary

A: Ako po ′yun.

Q: Ikaw ang sumasagot. Why did you say that you are Rhodora?cralawlibrary

A: Justice, nung ma-receive ko po ′yong text niya apat na beses ko pong na-receive ang text ni Arlene.

INVESTIGATOR:

Who is Arlene?cralawlibrary

A: Atty. Madarang. Arlene, sa text po niya sa akin, "Sir Lito, kamaganak po ito ni Mr. Lagua. Magkano pa po ba ang kakulangang pera para ibigay ko sa inyo. Si Rhodora ba kasama?" Hindi ko po sinagot yon. Pangalawa, ′yun din po ang message nya. Ano ito? Sa akin pong kuan, sa pag-iisip ko lang po, bakit dahil si Mr. Art Baluran kamag-anak na, ano ito? Text pa ulit pa sya ng pangatlo. Nang-iintriga na ′to. Pang-apat, intriga ′to. Text ko nga rin ′to, lokohan lang tayo. "Bkit si Rhodora ′to" yun po ang sagot ko sa kanya.

Q: So at that time you already knew about Rhodora?cralawlibrary

A: Hindi po, dun, duon po sa text niya nakalagay po dun eh, "Si Rhodora kasama ba"? So ikinuan ko po na si Rhodora ′to, dun po sa text nya.

Q: Nakipaglokohan ka?cralawlibrary

A: Sa text niya nakalagay dun na "Si Rhodora ba kasama" kaya po ako nakipaglokohan dun.43

As pointed out by the Investigating Officer, the respondent's claim of "joking around" ("nakipaglokohan") with an unknown sender of a text message by replying thereto is contrary to a normal person's reaction. This is made even more apparent by the fact that the respondent even admitted that he called Atty. Madarang twice, and when asked why, gave a vague answer, and, when further questioned, even broke down in tears.44

The respondent's claim that the admission of the text messages as evidence against him constitutes a violation of his right to privacy is unavailing. Text messages have been classified as "ephemeral electronic communication" under Section 1(k), Rule 2 of the Rules on Electronic Evidence,45 and "shall be proven by the testimony of a person who was a party to the same or has personal knowledge thereof." Any question as to the admissibility of such messages is now moot and academic, as the respondent himself, as well as his counsel, already admitted that he was the sender of the first three messages on Atty. Madarang's cell phone.

This was also the ruling of the Court in the recent case of Zaldy Nuez v. Elvira Cruz-Apao.46 In that case, the Court, in finding the respondent therein guilty of dishonesty and grave misconduct, considered text messages addressed to the complainant asking for a million pesos in exchange for a favorable decision in a case pending before the CA. The Court had the occasion to state:

'The text messages were properly admitted by the Committee since the same are now covered by Section 1(k), Rule 2 of the Rules on Electronic Evidence, which provides:

"Ephemeral electronic communication" refers to telephone conversations, text messages - and other electronic forms of communication the evidence of which is not recorded or retained."

Under Section 2, Rule 11 of the [said rules], "Ephemeral electronic communications shall be proven by the testimony of a person who was a party to the same or who has personal knowledge thereof - ." In this case, complainant who was the recipient of the said messages and therefore had personal knowledge thereof testified on their contents and import. Respondent herself admitted that the cellphone number reflected in complainant's cellphone from which the messages originated was hers. Moreover, any doubt respondent may have had as to the admissibility of the text messages had been laid to rest when she and her counsel signed and attested to the veracity of the text messages between her and complainant. It is also well to remember that in administrative cases, technical rules of procedure and evidence are not strictly applied. We have no doubt as to the probative value of the text messages as evidence in determining the guilt or lack thereof of respondent in this case.

Second. The respondent's testimony during the hearings held before Investigating Officer Atty. Longalong is replete with inconsistencies and "loopholes." He claimed that he made inquiries from other CA staff and learned that there was indeed a deal between someone in the criminal section and a certain Rhodora of the RTC, Pasig. He further

claimed that the said parties wanted to get back at him for "immediately serving" the release order which prevented them from demanding the balance of the deal from Lagua's relative. However, this bare claim was not corroborated by any witness. Moreover, the respondent alleged that two anonymous callers claimed to know something about the case against him; when asked about it, he stated that he no longer exerted efforts to find out who they were as they did not give out their names:

JUSTICE MAGTOLIS:

Q: On page 5 of your affidavit, you said in paragraph 8 "That I made some inquiry and some personnel of the Court of Appeals told me that there is indeed a deal between a staff in the Criminal Section and Rhodora of RTC, Pasig. Can you tell us who is this staff?cralawlibrary

A: Ah dito po Justice, hindi po siya nagpakilala, sa telephono po.

INVESTIGATOR:

Sino siya?cralawlibrary

A: Hindi po siya - ′yong tawag po niya sa akin sa telepono nang malaman po dito sa CA na ako ay kinasuhan ninyo tumawag po siya sa Personnel.

JUSTICE MAGTOLIS:

Q: Who is siya?cralawlibrary

A: Ay hindi po siya nagpakilala.

INVESTIGATOR:

Lalaki o babae?cralawlibrary

A: Una po babae tapos ′yong pangalawa po lalaki.

INVESTIGATOR:

Sinong kinakausap?cralawlibrary

A: Ako po.

INVESTIGATOR:

Hinahanap ka?cralawlibrary

A: Hinahanap po nila ako.

JUSTICE MAGTOLIS:

Q: What did he tell you? He, lalaki, ano?cralawlibrary

A: Sa babae muna po?cralawlibrary

Q: Oo, babae't lalake ba?cralawlibrary

A: Opo.

Q: Who was the first caller, the lady or the gentleman?cralawlibrary

A: Babae po.

Q: Were you the one who answered the phone?cralawlibrary

A: Hindi po.

INVESTIGATOR:

Hinahanap daw siya.

JUSTICE MAGTOLIS:

Q: Hinahanap ka, okay, when you answered the phone, what did you say?cralawlibrary

A: Ang sabi ko po sa kanya, "pupuwede mo ba akong matulungan sa paggawa ng affidavit dahil kinasuhan nga ako ni Justice Magtolis."

Q: But you do not know who you were talking to?cralawlibrary

A: Tinanong ko nga po kung sino siya eh tumutulong lang daw siya sa akin dahil ang naririnig niyang tsismis din dyan eh baka po si Rhodora ang may ka-kuan sa Criminal.

Q: Saan ′yong ka-kuan?cralawlibrary

A: Ang may kausap sa Criminal.

Q: Who said "na baka si Rhodora ang may kausap sa Criminal"?cralawlibrary

A: ′Yon pong kausap ko sa kabilang linya.

Q: The name you do not know?cralawlibrary

A: Eh tinanong ko naman po kung sino siya ayaw naman po niyang magpakilala. Matutulungan mo ba ako, ibinaba na po ang telepono.

INVESTIGATOR:

Anonymous caller.

JUSTICE MAGTOLIS:

You are very fond of answering calls. You don't even know the name.

Q: That anonymous caller told you that there must be some deals between Rhodora and someone from the Criminal Section?cralawlibrary

A: ′Yun din daw po ang naririnig niyang tsismis dyan sa labas.

Q: Tsismis, that was that the caller told you?cralawlibrary

A: Opo.

Q: And she wanted to help you?cralawlibrary

A: Kaya po sinabi din sa akin na tsismis eh hindi pa po pwedeng'

Q: What did you answer her?cralawlibrary

INVESTIGATOR:

Anong sagot mo raw?cralawlibrary

JUSTICE MAGTOLIS:

Q: Anong sagot niya sa tulungan kasi nakakarinig siyang tsismis?cralawlibrary

INVESTIGATOR:

Q Ano ang sagot mo?cralawlibrary

A: Eh iyon nga ang gusto kong malaman, ang katotohanan. Baka naman pupuwede mo akong matulungan. Sino ba ′to?cralawlibrary

JUSTICE MAGTOLIS:

Q: Di ba she was the one who offered to help?cralawlibrary

A: Ay ayaw daw po naman niyang masabit po ang pangalan niya.

Q: But she was the one who called you?cralawlibrary

A: Opo.

Q: Okay. How did your talk end with this girl or lady?cralawlibrary

A: Nung pagsalita ko nga pong baka pupuwede akong tulungan, wala na.

Q: How about the man, the gentleman or the boy who called?cralawlibrary

A: Same kuan din po ang kanilang kuan e.

JUSTICE MAGTOLIS:

Don't use kuan.

ATTY. ROSERO:

Sige, Lito, ipaliwanag mo.

A: Same kuento rin po, sinabi niya na ganuon din po na narinig din po niya sa labas.

JUSTICE MAGTOLIS:

Q: Alright, you were not the one who answered the call?cralawlibrary

A: Hindi po.

Q: Somebody called you that there's a phone call?cralawlibrary

A: Opo.

Q: When you answered, what was your first word?cralawlibrary

A: Hello!

Q: What was the answer at the other end of the line?cralawlibrary

A: Hello rin po.

Q: What next?cralawlibrary

A: Alam mo, ang sabi po niya sa akin ganito po'

Q: Who was the first one who said something other than hello?cralawlibrary

A: Siya po ang nauna.

Q: What did she say, the exact words?cralawlibrary

A: Exact words, sa naalala kong sinabi niya "Alam mo, Mr. Salud," Salud po ang kuan niya sa akin, "narinig ko sa labas, istoryahan dyan sa labas na baka si Rhodora ang may ka-kuan dito sa Criminal." Ang sabi ko po sa kanya "Iyan din ang itinawag sa akin kahapon. Eh dalawa na kayo eh baka naman pupuwede nyo akong matulungan. Puede ko bang malaman ang pangalan mo?" Ganun din po, ayaw na pong magsalita ibinaba na [ang] telepono.

Q: Do you know Rhodora?cralawlibrary

A: Hindi po.

Q: You never met her?cralawlibrary

A: Hindi po.

Q: You never talked to her?

A: Nung pong ipinakiusap nyo sa akin sa telepono po nung tayo po y'

Q: After the conversation with the lady and that gentleman who called you to offer some help and afterwards did not help at all, what happened?cralawlibrary

A: Wala na po.

Q: Did you not check with Rhodora, "What is this they are talking about that it might be between you and someone in the Criminal Section?" You never asked her that?cralawlibrary

A: Hindi ko na rin po'

Q: You did not. But I thought you wanted help from those people who can help you?cralawlibrary

A: Eh hindi na nga po sila nagbanggit po ng pangalan dahil po sabi ng unang babae ayaw nga rin po niyang sumabit sa kaso.47

This respondent's actuation on this matter, if at all true, is again contrary to the normal reaction of one who has been administratively charged, and wants to clear his name of any wrongdoing.

The respondent also admitted visiting an inmate (Vilma Dalawangbayan) at the correctional facility eight times for no apparent reason. This admission lends some credence to the testimony of Flores, that she was the one who introduced him to Dalawangbayan, the person he was visiting. When asked why he frequently visited, he stated that he found her beautiful ("Maganda po siya, Justice"), and was on the verge of courting her ("Para na nga po akong nanliligaw"). The Court believes that this allegation was concocted by the respondent as a mere afterthought, to cover up for his misdeeds.

The Investigating Officer also found that the respondent was "high-strung" during his testimony, and this finding must be accorded respect. Indeed, when the issue is the credibility of witnesses, the function of evaluating it is primarily lodged in the investigating judge. The rule which concedes due respect, and even finality, to the assessment of the credibility of witnesses by trial judges in civil and criminal cases where preponderance of evidence and proof beyond reasonable doubt, respectively, are required, applies a fortiori in administrative cases where the quantum of proof required is only substantial evidence. The investigating judge is in a better position to pass judgment on the credibility of witnesses, having personally heard them when they testified, and observed their deportment and manner of testifying.48 Thus, the following findings of Atty. Longalong are well taken:

However, respondent denied receiving P20,000 from Gamil and P15,000 from Flores and signing "LM Salud" on Flores' notebooks (Exhibits E-1 and F-1) but admitted visiting Vilma at the Correctional Institute for Women 8 times from May to August 1999. Respondent's denial here appears self-serving and incredible considering his admission of going to the Correctional Institute for Women several times for no valid official reason. Moreover, although Flores is a convict for estafa, her

testimony on the matter was more consistent and credible. Likewise, respondent admitted seeing Flores at the Correctional Institute for Women and that Flores mailed her letter to him on May 16, 1999 which he called "maintriga." He also admitted that he told Flores to seek the help of Justice Vasquez on her case. The foregoing, plus the fact that Flores eventually wrote Justice Vasquez, confirms the truth of Flores' testimony on the matter.

With the aforecited admissions by respondent, the substantial evidence presented by the complainant and her witnesses with their positive and forthright testimonies deserve more credence than respondent's self-serving denial and inconsistent and vague testimony. Even the demeanor of complainant and her witnesses give credence to their testimonies than the nervous and [high-strung] demeanor of respondent during his testimony. Moreover, complainant and her witnesses, including the superiors of respondent, have no reason or motive whatsoever to testify falsely against him. Respondent's defense of denial is inherently a weak defense. It is well settled that denial, to be believed, must be buttressed by strong evidence of non-culpability, otherwise the denial is purely self-serving and with nil evidentiary value (People of the Philippines v. Arlee, 323 SCRA 201). Like the defense of alibi, denial crumbles in the light of positive declarations (People of the Philippines v. Ricafranca, 323 SCRA 652).

Indeed, the Court is looked upon by people with high respect, a sacred place where litigants are heard, rights and conflicts settled and justice solemnly dispensed with. Misbehavior within or around the vicinity diminishes its sanctity and dignity. The conduct and behavior required of every court personnel, from the presiding judge to the lowliest clerk, must always be beyond reproach and circumscribed with the heavy burden of responsibility. Their conduct must, at all times, be characterized by, among other things, propriety and decorum so as to earn and keep the public's respect and confidence in the judicial service.49 Public service requires the utmost integrity and strictest discipline. Thus, a public servant must exhibit at all times the highest sense of honesty and integrity not only in the performance of his official duties but in his personal and private dealings with other people.50

While there is no direct evidence to suggest that he actually extorted money to "facilitate" the issuance of the appeal bond and release order which he himself served, the surrounding circumstances, as well as the inconsistencies in his testimony, point towards administrative culpability. The respondent's actuations fall short of the standard required of a public servant. He is guilty of gross or grave misconduct. Misconduct is a transgression of some established and definite rule of action, a forbidden act, a dereliction from duty, unlawful behavior, willful in character, improper or wrong behavior,51 while "gross," has been defined as "out of all measure; beyond allowance; flagrant; shameful; such conduct as is not to be excused."52 Under the Omnibus Civil Service Rules and Regulations, grave misconduct is punishable by dismissal from the service even for the first offense, as it is classified as a grave offense. However, considering that the respondent has not been previously charged nor administratively sanctioned, the Court finds that a penalty of suspension for one year and six months will serve the purpose of disciplining the respondent.

Court personnel, from the lowliest employee to the clerk of court or any position lower than that of a judge or justice, are involved in the dispensation of justice, and parties seeking redress from the courts for grievances look upon them as part of the Judiciary. They serve as sentinels of justice, and any act of impropriety on their part immeasurably affect the honor and dignity of the Judiciary and the people's confidence in it.53 Thus, any conduct which tends to diminish the image of the Judiciary cannot be countenanced.

IN LIGHT OF ALL THE FOREGOING, respondent Cielito M. Salud is found GUILTY of inefficiency and gross misconduct. He is SUSPENDED for a period of One (1) Year and Six (6) Months, effective immediately. He is further DIRECTED to inform the Court as to the date of his receipt of this Decision to determine when his suspension shall have taken effect.

The Office of the Court Administrator is also DIRECTED to conduct a discreet investigation on the possible involvement of Rhodora Valdez (Utility Worker), and other personnel of the Regional Trial Court of Pasig City, Branch 163.

SO ORDERED.

Panganiban, (Acting Cheif Justice), Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Tinga, Chico-Nazario, and Garcia, JJ., concur.Davide, Jr., C.J., Puno, Quisumbing, Ynares-Santiago, Carpio Morales, and Azcuna, JJ., on official leave.

Endnotes:

38 Section 23(p), Rule XIV, Omnibus Civil Service Rules and Regulations.

45 A.M. No. 01-7-01-SC, 17 July 2001. The Rules took effect on August 1, 2001.

111

[A.M. NO. CA-05-18-P : April 12, 2005]

ZALDY NUEZ, Complainant, v. ELVIRA CRUZ-APAO, Respondent.

D E C I S I O N

What brings our judicial system into disrepute are often the actuations of a few erring court personnel peddling influence to party-litigants, creating the impression that decisions can be bought and sold, ultimately resulting in the disillusionment of the public. This Court has never wavered in its vigilance in eradicating the so-called "bad eggs" in the judiciary.   And whenever warranted by the gravity of the offense, the supreme penalty of dismissal in an administrative case is meted to erring personnel.1

The above pronouncement of this Court in the case of Mendoza v. Tiongson2 is applicable to the case at bar.

This is an administrative case for Dishonesty and Grave Misconduct3 against Elvira Cruz-Apao (Respondent), Executive Assistant II of the Acting Division Clerk of Court of the Fifteenth (15th) Division, Court of Appeals (CA). The complaint arose out of respondent's solicitation of One Million Pesos (P1,000,000.00) from Zaldy Nuez (Complainant) in exchange for a speedy and favorable decision of the latter's pending case in the CA,4 more particularly, CA-G.R. SP No. 73460 entitled "PAGCOR v. Zaldy Nuez."5 Complainant initially lodged a complaint with the Action Center of the Television program Imbestigador of GMA Network,6 the crew of which had accompanied him to the Presidential Anti-Organized Crime Commission'Special Projects Group (PAOCC-SPG) in Malacañang where he filed a complaint for extortion7 against respondent. This led to the conduct of an entrapment operation by elements of the Presidential Anti-Organized Crime Task Force (PAOCTF) on 28 September 2004 at the Jollibee Restaurant, 2nd Floor, Times Plaza Bldg., corner Taft and United Nations Avenue, Manila,8 the place where the supposed hand-over of the money was going to take place.

Respondent's apprehension by agents of the PAOCTF in the course of the entrapment operation prompted then CA Presiding Justice (PJ) Cancio C. Garcia (now Supreme Court Justice) to issue Office Order No. 297-04-CG9 (Order) which created an ad-hoc investigating committee (Committee).10 The Committee was specifically tasked among others to conduct a thorough and exhaustive investigation of respondent's case and to recommend the proper administrative sanctions against her as the evidence may warrant.11

In accordance with the mandate of the Order, the Committee conducted an investigation of the case and issued a Resolution12 dated 18 October 2004 where it concluded that a prima facie case of Dishonesty and Serious Misconduct against respondent existed. The Committee thus recommended respondent's preventive suspension for ninety (90) days pending formal investigation of the charges against her.13 On 28 January 2005, the Committee submitted a Report14 to the new CA Presiding Justice Romeo A. Brawner with its recommendation that respondent be dismissed from service.

Based on the hearings conducted and the evidence received by the Committee, the antecedent facts are as follows:

Complainant's case referred to above had been pending with the CA for more than two years.15 Complainant filed an illegal dismissal case against PAGCOR before the Civil Service Commission (CSC).   The CSC ordered complainant's reinstatement but a writ of preliminary injunction and a temporary restraining order was issued by the CA in favor of PAGCOR, thus complainant was not reinstated to his former job pending adjudication of the case.16 Desiring an expeditious decision of his case, complainant sought the assistance of respondent sometime in July 2004 after learning of the latter's employment with the CA from her sister, Magdalena David. During their first telephone conversation17 and thereafter through a series of messages they exchanged via SMS,18 complainant informed respondent of the particulars of his pending case.   Allegedly, complainant thought that respondent would be able to advise him on how to achieve an early resolution of his case.

However, a week after their first telephone conversation, respondent allegedly told complainant that a favorable and speedy decision of his case was attainable but the person who was to draft the decision was in return asking for One Million Pesos (P1,000,000.00).19

Complainant expostulated that he did not have that kind of money since he had been jobless for a long time, to which respondent replied, "Eh, ganoon talaga ang lakaran dito, eh. Kung wala kang pera, pasensiya na."20 Complainant then tried to ask for a reduction of the amount but respondent held firm asserting that the price had been set, not by her but

by the person who was going to make the decision.21   Respondent even admonished complainant with the words "Wala tayo sa palengke iho!"22 when the latter bargained for a lower amount.23

Complainant then asked for time to determine whether or not to pay the money in exchange for the decision. Instead, in August of 2004, he sought the assistance of Imbestigador.24 The crew of the TV program accompanied him to PAOCCF-SPG where he lodged a complaint against respondent for extortion.25 Thereafter, he communicated with respondent again to verify if the latter was still asking for the money26 and to set up a meeting with her.27   Upon learning that respondent's offer of a favorable decision in exchange for One Million Pesos (P1,000,000.00) was still standing, the plan for the entrapment operation was formulated by Imbestigador in cooperation with the PAOCC.

On 24 September 2004, complainant and respondent met for the first time in person at the 2nd Floor of Jollibee, Times Plaza Bldg.,28 the place where the entrapment operation was later conducted.   Patricia Siringan (Siringan), a researcher of Imbestigador, accompanied complainant and posed as his sister-in-law.29 During the meeting, complainant clarified from respondent that if he gave the amount of One Million Pesos (P1,000,000.00), he would get a favorable decision. This was confirmed by the latter together with the assurance that it would take about a month for the decision to come out.30 Respondent also explained that the amount of One Million Pesos (P1,000,000.00) guaranteed a favorable decision only in the CA but did not extend to the Supreme Court should the case be appealed later.31

When respondent was asked where the money will go, she claimed that it will go to a male researcher whose name she refused to divulge. The researcher was allegedly a lawyer in the CA Fifth (5 th) Division where complainant case was pending.32     She also claimed that she will not get any part of the money unless the researcher decides to give her some.33

Complainant tried once again to bargain for a lower amount during the meeting but respondent asserted that the amount was fixed.   She even explained that this was their second transaction and the reason why the amount was closed at One Million Pesos (P1,000,000.00) was because on a previous occasion, only Eight Hundred Thousand Pesos (P800,000.00) was paid by the client despite the fact that the amount had been pegged at One Million Three Hundred Thousand Pesos (P1,300,000.00).34 Complainant then proposed that he pay a down payment of Seven Hundred Thousand Pesos (P700,000.00) while the balance of Three Hundred Thousand Pesos (P300,000.00) will be paid once the decision had been released.35 However, respondent refused to entertain the offer, she and the researcher having learned their lesson from their previous experience for as then, the client no longer paid the balance of Five Hundred Thousand Pesos (P500,000.00) after the decision had come out.36

Complainant brought along copies of the documents pertinent to his case during the first meeting.   After reading through them, respondent allegedly uttered, "Ah, panalo ka."37 The parties set the next meeting date at lunchtime on 28 September 2004 and it was understood that the money would be handed over by complainant to respondent then.38

On the pre-arranged meeting date, five (5) PAOCTF agents, namely: Capt. Reynaldo Maclang (Maclang) as team leader, SPO1 Renato Banay (Banay), PO1 Bernard Villena (Villena), PO1 Danny Feliciano, and PO2 Edgar delos Reyes39 arrived at around 11:30 in the morning at Jollibee.40 Nuez and Siringan arrived at past noon and seated themselves at the table beside the one occupied by the two (2) agents, Banay and Villena. Complainant had with him an unsealed long brown envelope containing ten (10) bundles of marked money and paper money which was to be given to respondent.41 The envelope did not actually contain the One Million Pesos (P1,000,000.00) demanded by respondent, but instead contained paper money in denominations of One Hundred Pesos (P100.00), Five Hundred Pesos (P500.00) and One Thousand Pesos (P1,000.00), as well as newspaper cut-outs.42 There were also ten (10) authentic One Hundred Peso (P100.00) bills which had been previously dusted with ultra-violet powder by the PAOCTF.43 The three other PAOCTF agents were seated a few tables away44 and there were also three (3) crew members from Imbestigador at another table operating a mini DV camera that was secretly recording the whole transaction.45

Respondent arrived at around 1:00 p.m.46 She appeared very nervous and suspicious during the meeting.47 Ironically, she repeatedly said that complainant might entrap her, precisely like those that were shown on Imbestigador.48 She thus refused to receive the money then and there. What she proposed was for complainant and Siringan to travel with her in a taxi and drop her off at the CA where she would receive the money.49

More irony ensued.   Respondent actually said that she felt there were policemen around and she was afraid that once she took hold of the envelope complainant proffered, she would suddenly be arrested and handcuffed.50 At one point, she even said, "Ayan o, tapos na silang kumain, bakit hindi pa sila umaalis?,"51 referring to Banay and Villena at the next table. To allay respondent's suspicion, the two agents stood up after a few minutes and went near the staircase where they could still see what was going on.52

Complainant, respondent and Siringan negotiated for almost one hour.53   Complainant and Siringan bargained for a lower price but respondent refused to accede.   When respondent finally touched the unsealed envelope to look at the money inside, the PAOCTF agents converged on her and invited her to the Western Police District (WPD) Headquarters at United Nations Avenue for questioning.54 Respondent became hysterical as a commotion ensued inside the restaurant.55

On the way to the WPD on board the PAOCTF vehicle, Banay asked respondent why she went to the restaurant. The latter replied that she went there to get the One Million Pesos (P1,000,000.00).56

Respondent was brought to the PNP Crime Laboratory at the WPD where she was tested and found positive for ultra-violet powder that was previously dusted on the money.57   She was later detained at the WPD Headquarters.

At seven o'clock in the evening of 28 September 2004, respondent called Atty. Lilia Mercedes Encarnacion Gepty (Atty. Gepty), her immediate superior in the CA at the latter's house.58 She tearfully confessed to Atty. Gepty that "she asked for money for a case and was entrapped by police officers and the media."59 Enraged at the news, Atty. Gepty asked why she had done such a thing to which respondent replied, "Wala lang ma'am, sinubukan ko lang baka makalusot."60 Respondent claimed that she was ashamed of what she did and repented the same.   She also asked for Atty. Gepty's forgiveness and help. The latter instead reminded respondent of the instances when she and her co-employees at the CA were exhorted during office meetings never to commit such offenses.61

Atty. Gepty rendered a verbal report62 of her conversation with their division's chairman, Justice Martin S. Villarama.   She reduced the report into writing and submitted the same to then PJ Cancio Garcia on 29 September 2004.63 She also later testified as to the contents of her report to the Committee.

During the hearing of this case, respondent maintained that what happened was a case of instigation and not an entrapment. She asserted that the offer of money in exchange for a favorable decision came not from her but from complainant. To support her contention, she presented witnesses who testified that it was complainant who allegedly offered money to anyone who could help him with his pending case. She likewise claimed that she never touched the money on 28 September 2004, rather it was Capt. Maclang who forcibly held her hands and pressed it to the envelope containing the money. She thus asked that the administrative case against her be dismissed.

This Court is not persuaded by respondent's version. Based on the evidence on record, what happened was a clear case of entrapment, and not instigation as respondent would like to claim.

In entrapment, ways and means are resorted to for the purpose of ensnaring and capturing the law-breakers in the execution of their criminal plan.   On the other hand, in instigation, the instigator practically induces the would-be defendant into the commission of the offense, and he himself becomes a co-principal.64

In this case, complainant and the law enforcers resorted to entrapment precisely because respondent demanded the amount of One Million Pesos (P1,000,000.00) from complainant in exchange for a favorable decision of the latter's pending case.   Complainant's narration of the incidents which led to the entrapment operation are more in accord with the circumstances that actually transpired and are more credible than respondent's version.

Complainant was able to prove by his testimony in conjunction with the text messages from respondent duly presented before the Committee that the latter asked for One Million Pesos (P1,000,000.00) in exchange for a favorable decision of the former's pending case with the CA.   The text messages were properly admitted by the Committee since the same are now covered by Section 1(k), Rule 2 of the Rules on Electronic Evidence65 which provides:

"Ephemeral electronic communication" refers to telephone conversations, text messages . . . and other electronic forms of communication the evidence of which is not recorded or retained."

Under Section 2, Rule 11 of the Rules on Electronic Evidence, "Ephemeral electronic communications shall be proven by the testimony of a person who was a party to the same or who has personal knowledge thereof . . . ." In this case, complainant who was the recipient of said messages and therefore had personal knowledge thereof testified on their contents and import.   Respondent herself admitted that the cellphone number reflected in complainant's cellphone from which the messages originated was hers.66 Moreover, any doubt respondent may have had as to the admissibility of the text messages had been laid to rest when she and her counsel signed and attested to the veracity of the text messages between her and complainant.67 It is also well to remember that in administrative cases, technical rules of procedure and evidence are not strictly applied.68 We have no doubt as to the probative value of the text messages as evidence in determining the guilt or lack thereof of respondent in this case.

Complainant's testimony as to the discussion between him and respondent on the latter's demand for One Million Pesos (P1,000,000.00) was corroborated by the testimony of a disinterested witness, Siringan, the reporter of

Imbestigador who was present when the parties met in person.   Siringan was privy to the parties' actual conversation since she accompanied complainant on both meetings held on 24 and 28 of September 2004 at Jollibee.

Respondent's evidence was comprised by the testimony of her daughter and sister as well as an acquaintance who merely testified on how respondent and complainant first met.   Respondent's own testimony consisted of bare denials and self-serving claims that she did not remember either the statements she herself made or the contents of the messages she sent.   Respondent had a very selective memory made apparent when clarificatory questions were propounded by the Committee.

When she was asked if she had sent the text messages contained in complainant's cellphone and which reflected her cellphone number, respondent admitted those that were not incriminating but claimed she did not remember those that clearly showed she was transacting with complainant.   Thus, during the 17 November 2004 hearing, where respondent was questioned by Justice Salazar-Fernando, the following transpired:

Q:       After reading those text messages, do you remember having made those text messages?chanroblesvirtualawlibrary

(Respondent)

A:       Only some of these, your honors.

Justice Salazar-Fernando: Which one?chanroblesvirtualawlibrary

A:       Sabi ko po magpunta na lang sila sa office. Yung nasa bandang unahan po, your Honors.

Q:       What else?chanroblesvirtualawlibrary

A:       Tapos yung sabi ko pong pagpunta niya magdala siya ng I.D. or isama niya sa kanya si Len David.

Q:       Okay, You remember having texted Zaldy Nuez on September 23, 2004 at 1309 which was around 1:09 in the afternoon and you said "di me pwede punta na lang kayo dito sa office Thursday 4:45 p.m. Room 107 Centennial Building.

A:       Yes, your Honors.

Q:       And on September 23, 2004 at 1731 which was around 5:31 in the afternoon you again texted Zaldy Nuez and you said "Sige bukas nang tanghali sa Times Plaza, Taft Avenue, corner U.N. Avenue. Magdala ka ng I.D. para makilala kita o isama mo si Len David.

A:       Opo, your Honors.

Q:       How about on September 23 at 5:05 in the afternoon when you said "Di pwede kelan mo gusto fixed price na iyon."

A:       I don't remember that, your Honors.

Q:       Again on September 23 at 5:14 p.m. you said "Alam mo di ko iyon price and nagbigay noon yung gagawa. Wala ako doon." You don't also remember this?chanroblesvirtualawlibrary

A:       Yes, your Honors.

Q:       September 27 at 1:42 p.m. "Oo naman ayusin nyo yung hindi halatang pera". You also don't remember that?chanroblesvirtualawlibrary

A:       Yes Your Honors.

Q:       September 27 at 1:30 in the afternoon, "Di na pwede sabi sa akin.   Pinakaiusapan ko na nga ulit iyon."   You don't remember that?chanroblesvirtualawlibrary

A:       No, your Honors.69

Respondent would like this Court to believe that she never had any intention of committing a crime, that the offer of a million pesos for a favorable decision came from complainant and that it was complainant and the law enforcers who instigated the whole incident.

Respondent thus stated that she met with complainant only to tell the latter to stop calling and texting her, not to get the One Million Pesos (P1,000,000.00) as pre-arranged.

This claim of respondent is preposterous to say the least. Had the offer of a million pesos really come from complainant and had she really intended to stop the latter from corrupting her, she could have simply refused to answer the latter's messages and calls.   This she did not do.   She answered those calls and messages though she later claimed she did not remember having sent the same messages to complainant.   She could also have reported the matter to the CA Presiding Justice, an action which respondent admitted during the hearing was the proper thing to do under the circumstances.70 But this course of action she did not resort to either, allegedly because she never expected things to end this way.71

While claiming that she was not interested in complainant's offer of a million pesos, she met with him not only once but twice, ostensibly, to tell the latter to stop pestering her.   If respondent felt that telling complainant to stop pestering her would be more effective if she did it in person, the same would have been accomplished with a single meeting.   There was no reason for her to meet with complainant again on 28 September 2004 unless there was really an understanding between them that the One Million Pesos (P1,000,000.00) will be handed over to her then.   Respondent even claimed that she became afraid of complainant when she learned that the latter had been dismissed by PAGCOR for using illegal drugs.72 This notwithstanding, she still met with him on 28 September 2004.

Anent complainant's narration of respondent's refusal to reduce the amount of One Million Pesos (P1,000.000.00) based on the lesson learned from a previous transaction, while admitting that she actually said the same, respondent wants this Court to believe that she said it merely to have something to talk about.73 If indeed, respondent had no intention of committing any wrongdoing, it escapes the Court why she had to make up stories merely to test if complainant could make good on his alleged boast that he could come up with a million pesos.   It is not in accord with ordinary human experience for an honest government employee to make up stories that would make party-litigants believe that court decisions may be bought and sold.   Time and again this Court has declared, thus:

"Everyone in the judiciary bears a heavy burden of responsibility for the proper discharge of his duty and it behooves everyone to steer clear of any situations in which the slightest suspicion might be cast on his conduct. Any misbehavior on his part, whether true or only perceived, is likely to reflect adversely on the administration of justice."74

Respondent having worked for the government for twenty four (24) years, nineteen (19) of which have been in the CA,75 should have known very well that court employees are held to the strictest standards of honesty and integrity.   Their conduct should at all times be above suspicion.   As held by this Court in a number of cases, "The conduct or behavior of all officials of an agency involved in the administration of justice, from the Presiding Judge to the most junior clerk, should be circumscribed with the heavy burden of responsibility."76 Their conduct must, at all times be characterized by among others, strict propriety and decorum in order to earn and maintain the respect of the public for the judiciary.77

Respondent's actuations from the time she started communicating with complainant in July 2004 until the entrapment operation on 28 September 2004 show a lack of the moral fiber demanded from court employees. Respondent's avowals of innocence notwithstanding, the evidence clearly show that she solicited the amount of One Million Pesos (P1,000,000.00) from complainant in exchange for a favorable decision.   The testimony of Atty. Gepty, the recipient of respondent's confession immediately after the entrapment operation, unmistakably supports the finding that respondent did voluntarily engage herself in the activity she is being accused of.

Respondent's solicitation of money from complainant in exchange for a favorable decision violates Canon I of the Code of Conduct for Court Personnel which took effect on 1 June 2004 pursuant to A.M. No. 03-06-13-SC. Sections 1 and 2, Canon I of the Code of Conduct for Court Personnel expressly provide:

"SECTION 1. Court personnel shall not use their official position to secure unwarranted benefits, privileges or exemption for themselves or for others."

"SECTION 2. Court personnel shall not solicit or accept any gift, favor or benefit based on any explicit or implicit understanding that such gift, favor or benefit shall influence their official actions." (Underscoring supplied)ςrαlαωlιbrαrÿ

It is noteworthy that the penultimate paragraph of the Code of Conduct for Court Personnel specifically provides:

INCORPORATION OF OTHER RULES

"SECTION 1. All provisions of the law, Civil Service rules, and issuances of the Supreme Court governing the conduct of public officers and employees applicable to the judiciary are deemed incorporated into this Code."

By soliciting the amount of One Million Pesos (P1,000,000.00) from complainant, respondent committed an act of impropriety which immeasurably affects the honor and dignity of the judiciary and the people's confidence in it.

In the recent case of Aspiras v. Abalos,78 complainant charged respondent, an employee of the Records Section, Office of the Court Administrator (OCA), Supreme Court for allegedly deceiving him into giving her money in the total amount of Fifty Two Thousand Pesos (P52,000.00) in exchange for his acquittal in a murder case on appeal before the Supreme Court.   It turned out that respondent's representation was false because complainant was subsequently convicted of murder and sentenced to suffer the penalty of reclusion perpetua by the Supreme Court.79

The Supreme Court en banc found Esmeralda Abalos guilty of serious misconduct and ordered her dismissal from the service. This Court aptly held thus:

"In Mirano v. Saavedra,80 this Court emphatically declared that a public servant must exhibit at all times the highest sense of honesty and integrity. The administration of justice is a sacred task, and by the very nature of their duties and responsibilities, all those involved in it must faithfully adhere to, hold inviolate, and invigorate the principle that public office is a public trust, solemnly enshrined in the Constitution."81

Likewise, in the grave misconduct case against Datu Alykhan T. Amilbangsa of the Shari a Circuit Court, Bengo, Tawi-Tawi,82 this Court stated:

"No position demands greater moral righteousness and uprightness from the occupant than the judicial office. Those connected with the dispensation of justice bear a heavy burden of responsibility. Court employees in particular, must be individuals of competence, honesty and probity charged as they are with safeguarding the integrity of the court . . . . The High Court has consistently held that persons involved in the administration of justice ought to live up to the strictest standards of honesty and integrity in the public service. He should refrain from financial dealings which would interfere with the efficient performance of his duties.83 The conduct required of court personnel must always be beyond reproach."84

The following pronouncement of this Court in the case of Yrastorza, Sr. v. Latiza, Court Aide, RTC Branch 14 Cebu City 85 is also worth remembering:

"Court employees bear the burden of observing exacting standards of ethics and morality. This is the price one pays for the honor of working in the judiciary. Those who are part of the machinery dispensing justice from the lowliest clerk to the presiding judge must conduct themselves with utmost decorum and propriety to maintain the public's faith and respect for the judiciary. Improper behavior exhibits not only a paucity of professionalism at the workplace but also a great disrespect to the court itself. Such demeanor is a failure of circumspection demanded of every public official and employee."86

In view of the facts narrated above and taking into account the applicable laws and jurisprudence, the Committee in their Report87 recommended that respondent be dismissed from government service for GRAVE MISCONDUCT and violation of Sections 1 and 2, Canon 1 of the Code of Conduct for Court Personnel.88

Finding the Committee's recommendation to be supported by more than substantial evidence and in accord with the applicable laws and jurisprudence, the recommendation is well taken.

WHEREFORE, premises considered, respondent Elvira Cruz-Apao is found GUILTY of GRAVE MISCONDUCT and violation of SECTIONS 1 and 2 of the CODE OF CONDUCT FOR COURT PERSONNEL and is accordingly DISMISSED from government service, with prejudice to re-employment in any branch, instrumentality or agency of the government, including government-owned and controlled corporations.   Her retirement and all benefits except accrued leave credits are hereby FORFEITED.

SO ORDERED.

Davide, Jr., C.J., Puno, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., Azcuna, Tinga and Chico-Nazario, JJ., concur.Garcia, J., No part.

Endnotes:

10 Composed of Justice Rodrigo V. Cosico as Chairman and Justices Remedios Salazar-Fernando and Japar B. Dimaampao as members.14 Ad Hoc Investigating Committee Report, pp. 1-47.65 Section 2, Rule 1 of the Rules on Electronic Evidence provides that: "These Rules shall apply to . . . administrative cases."68 Emin v. De Leon, G.R. No. 139794, 27 February 2002, 378 SCRA 143. 82 Re:   Memorandum dated 27 Sept. 1999 of Ma. Corazon M. Molo, OIC, OAS, OCA, A.M. No. SC-00-6-P, 16 October 2003, 413 SCRA 520.

107[G.R. No. 165487 : July 13, 2011]

COUNTRY BANKERS INSURANCE CORPORATION, PETITIONER, VS. ANTONIO LAGMAN, RESPONDENT.

D E C I S I O N

This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision 1 and Resolution 2 of the Court of Appeals dated 21 June 2004 and 24 September 2004, respectively.

These are the undisputed facts.

Nelson Santos (Santos) applied for a license with the National Food Authority (NFA) to engage in the business of storing not more than 30,000 sacks of palay valued at P5,250,000.00 in his warehouse at Barangay Malacampa, Camiling, Tarlac.  Under Act No. 3893 or the General Bonded Warehouse Act, as amended, 3 the approval for said license was conditioned upon posting of a cash bond, a bond secured by real estate, or a bond signed by a duly authorized bonding company, the amount of which shall be fixed by the NFA Administrator at not less than thirty-three and one third percent (33 1/3%) of the market value of the maximum quantity of rice to be received.

Accordingly, Country Bankers Insurance Corporation (Country Bankers) issued Warehouse Bond No. 03304 4 for P1,749,825.00 on 5 November 1989 and Warehouse Bond No. 02355 5 for P749,925.00 on 13 December 1989 (1989 Bonds) through its agent, Antonio Lagman (Lagman).  Santos was the bond principal, Lagman was the surety and the Republic of the Philippines, through the NFA was the obligee.  In consideration of these issuances, corresponding Indemnity Agreements 6 were executed by Santos, as bond principal, together with Ban Lee Lim Santos (Ban Lee Lim), Rhosemelita Reguine (Reguine) and Lagman, as co-signors.  The latter bound themselves jointly and severally liable to Country Bankers for any damages, prejudice, losses, costs, payments, advances and expenses of whatever kind and nature, including attorney's fees and legal costs, which it may sustain as a consequence of the said bond; to reimburse Country Bankers of whatever amount it may pay or cause to be paid or become liable to pay thereunder; and to pay interest at the rate of 12% per annum computed and compounded monthly, as well as to pay attorney's fees of 20% of the amount due it. 7

Santos then secured a loan using his warehouse receipts as collateral. 8  When the loan matured, Santos defaulted in his payment.  The sacks of palay covered by the warehouse receipts were no longer found in the bonded warehouse. 9  By virtue of the surety bonds, Country Bankers was compelled to pay P1,166,750.37. 10

Consequently, Country Bankers filed a complaint for a sum of money docketed as Civil Case No. 95-73048 before the Regional Trial Court (RTC) of Manila.  In his Answer, Lagman alleged that the 1989 Bonds were valid only for 1 year from the date of their issuance, as evidenced by receipts; that the bonds were never renewed and revived by payment of premiums; that on 5 November 1990, Country Bankers issued Warehouse Bond No. 03515 (1990 Bond) which was also valid for one year and that no Indemnity Agreement was executed for the purpose; and that the 1990 Bond supersedes, cancels, and renders no force and effect the 1989 Bonds. 11

The bond principals, Santos and Ban Lee Lim, were not served with summons because they could no longer be found. 12  The case was eventually dismissed against them without prejudice. 13  The other co-signor, Reguine, was declared in default for failure to file her answer. 14

On 21 September 1998, the trial court rendered judgment declaring Reguine and Lagman jointly and severally liable to pay Country Bankers the amount of P2,400,499.87. 15  The dispositive portion of the RTC Decision 16 reads:

WHEREFORE, premises considered, judgment is hereby rendered, ordering defendants Rhomesita [sic] Reguine and Antonio Lagman, jointly and severally liable to pay plaintiff, Country Bankers Assurance Corporation, the amount of P2,400,499.87, with 12% interest from the date the complaint was filed until fully satisfied plus 20% of the amount due plaintiff as and for attorney's fees and to pay the costs.

As the Court did not acquire jurisdiction over the persons of defendants Nelson Santos and Ban Lee Lim Santos, let

the case against them be DISMISSED.  Defendant Antonio Lagman's counterclaim is likewise DISMISSED, for lack of merit. 17

In holding Lagman and Reguine solidarily liable to Country Bankers, the trial court relied on the express terms of the Indemnity Agreement that they jointly and severally bound themselves to indemnify and make good to Country Bankers any liability which the latter may incur on account of or arising from the execution of the bonds. 18

The trial court rationalized that the bonds remain in force unless cancelled by the Administrator of the NFA and cannot be unilaterally cancelled by Lagman.  The trial court emphasized that for the failure of Lagman to comply with his obligation under the Indemnity Agreements, he is likewise liable for damages as a consequence of the breach.

Lagman filed an appeal to the Court of Appeals, docketed as CA G.R. CV No. 61797.  He insisted that the lifetime of the 1989 Bonds, as well as the corresponding Indemnity Agreements was only 12 months.  According to Lagman, the 1990 Bond was not pleaded in the complaint because it was not covered by an Indemnity Agreement and it superseded the two prior bonds. 19

On 21 June 2004, the Court of Appeals rendered the assailed Decision reversing and setting aside the Decision of the RTC and ordering the dismissal of the complaint filed against Lagman. 20

The appellate court held that the 1990 Bond superseded the 1989 Bonds. The appellate court observed that the 1990 Bond covers 33.3% of the market value of the palay, thereby manifesting the intention of the parties to make the latter bond more comprehensive.  Lagman was also exonerated by the appellate court from liability because he was not a signatory to the alleged Indemnity Agreement of 5 November 1990 covering the 1990 Bond.  The appellate court rejected the argument of Country Bankers that the 1989 bonds were continuing, finding, as reason therefor, that the receipts issued for the bonds indicate that they were effective for only one-year.

Country Bankers sought reconsideration which was denied in a Resolution dated 24 September 2004. 21

Expectedly, Country Bankers filed the instant petition attributing two (2) errors to the Court of Appeals, to wit:

A.

THE HONORABLE COURT OF APPEALS seriously erred in disregarding the express provisions of Section 177 of the insurance code when it held that the subject surety bonds were superseded by a subsequent bond notwithstanding the non-cancellation thereof by the bond obligee.

B.

The honorable court of appeals seriously erred in holding that receipts for the payment of premiums prevail over the express provision of the surety bond that fixes the term thereof.22

Country Bankers maintains that by the express terms of the 1989 Bonds, they shall remain in full force until cancelled by the Administrator of the NFA. As continuing bonds, Country Bankers avers that Section 177 of the Insurance Code applies, in that the bond may only be cancelled by the obligee, by the Insurance Commissioner or by a competent court.

Country Bankers questions the existence of a third bond, the 1990 Bond, which allegedly cancelled the 1989 Bonds on the following grounds: First, Lagman failed to produce the original of the 1990 Bond and no basis has been laid for the presentation of secondary evidence; Second, the issuance of the 1990 Bond was not approved and processed by Country Bankers; Third, the NFA as bond obligee was not in possession of the 1990 Bond.  Country Bankers stresses that the cancellation of the 1989 Bonds requires the participation of the bond obligee.  Ergo, the bonds remain subsisting until cancelled by the bond obligee.  Country Bankers further assert that Lagman also failed to prove that the NFA accepted the 1990 Bond in replacement of the 1989 Bonds.

Country Bankers notes that the receipts issued for the 1989 Bonds are mere evidence of premium payments and should not be relied on to determine the period of effectivity of the bonds.  Country Bankers explains that the receipts only represent the transactions between the bond principal and the surety, and does not involve the NFA as bond obligee.

Country Bankers calls this Court's attention to the incontestability clause contained in the Indemnity Agreements which prohibits Lagman from questioning his liability therein.

In his Comment, Lagman raises the issue of novation by asserting that the 1989 Bonds were superseded by the 1990 Bond, which did not include Lagman as party. Therefore, Lagman argues, Country Bankers has no cause of action against him.  Lagman also reiterates that because of novation, the 1989 bonds are neither perpetual nor continuing.

Lagman anchors his defense on two (2) arguments: 1) the 1989 Bonds have expired and 2) the 1990 Bond novates the 1989 Bonds.

The Court of Appeals held that the 1989 bonds were effective only for one (1) year, as evidenced by the receipts on the payment of premiums.

We do not agree.

The official receipts in question serve as proof of payment of the premium for one year on each surety bond.  It does not, however, automatically mean that the surety bond is effective for only one (1) year.  In fact, the effectivity of the bond is not wholly dependent on the payment of premium. Section 177 of the Insurance Code expresses:

Sec. 177. The surety is entitled to payment of the premium as soon as the contract of suretyship or bond is perfected and delivered to the obligor. No contract of suretyship or bonding shall be valid and binding unless and until the premium therefor has been paid, except where the obligee has accepted the bond, in which case the bond becomes valid and enforceable irrespective of whether or not the premium has been paid by the obligor to the surety: Provided, That if the contract of suretyship or bond is not accepted by, or filed with the obligee, the surety shall collect only reasonable amount, not exceeding fifty per centum of the premium due thereon as service fee plus the cost of stamps or other taxes imposed for the issuance of the contract or bond: Provided, however, That if the non-acceptance of the bond be due to the fault or negligence of the surety, no such service fee, stamps or taxes shall be collected. (Emphasis supplied)

The 1989 Bonds have identical provisions and they state in very clear terms the effectivity of these bonds, viz:

NOW, THEREFORE, if the above-bounded Principal shall well and truly deliver to the depositors PALAY received by him for STORAGE at any time that demand therefore is made, or shall pay the market value therefore in case he is unable to return the same, then this obligation shall be null and void; otherwise it shall remain in full force and effect and may be enforced in the manner provided by said Act No. 3893 as amended by Republic Act No. 247 and P.D. No. 4.  This bond shall remain in force until cancelled by the Administrator of National Food Authority. 23

This provision in the bonds is but in compliance with the second paragraph of Section 177 of the Insurance Code, which specifies that a continuing bond, as in this case where there is no fixed expiration date, may be cancelled only by the obligee, which is the NFA, by the Insurance Commissioner, and by the court.  Thus:

In case of a continuing bond, the obligor shall pay the subsequent annual premium as it falls due until the contract of suretyship is cancelled by the obligee or by the Commissioner or by a court of competent jurisdiction, as the case may be.

By law and by the specific contract involved in this case, the effectivity of the bond required for the obtention of a license to engage in the business of receiving rice for storage is determined not alone by the payment of premiums but principally by the Administrator of the NFA.  From beginning to end, the Administrator's brief is the enabling or disabling document.

The clear import of these provisions is that the surety bonds in question cannot be unilaterally cancelled by Lagman.  The same conclusion was reached by the trial court and we quote:

As there appears no record of cancellation of the Warehouse Bonds No. 03304 and No. 02355 either by the administrator of the NFA or by the Insurance Commissioner or by the Court, the Warehouse Bonds are valid and binding and cannot be unilaterally cancelled by defendant Lagman as general agent of the plaintiff. 24

While the trial court did not directly rule on the existence and validity of the 1990 Bond, it upheld the 1989 Bonds as valid and binding, which could not be unilaterally cancelled by Lagman. The Court of Appeals, on the other hand, acknowledged the 1990 Bond as having cancelled the two previous bonds by novation.  Both courts however failed to discuss their basis for rejecting or admitting the 1990 Bond, which, as we indicated, is bone to pick in this case.

Lagman's insistence on novation depends on the validity, nay, existence of the allegedly novating 1990 Bond.  Country Bankers understandably impugns both.  We see the point.  Lagman presented a mere photocopy of the 1990 Bond.  We rule as inadmissible such copy.

Under the best evidence rule, the original document must be produced whenever its contents are the subject of inquiry. 25 The rule is encapsulated in Section 3, Rule 130 of the Rules of Court, as follow:

Sec. 3. Original document must be produced; exceptions. -- When the subject of inquiry is the contents of a documents, no evidence shall be admissible other than the original document itself, except in the following cases:

(a)  When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;

(b)  When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

(c)  When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and

(d)  When the original is a public record in the custody of a public officer or is recorded in a public office. 26

A photocopy, being a mere secondary evidence, is not admissible unless it is shown that the original is unavailable. 27  Section 5, Rule 130 of the Rules of Court states:

SEC.5 When original document is unavailable. -- When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.

Before a party is allowed to adduce secondary evidence to prove the contents of the original, the offeror must prove the following: (1) the existence or due execution of the original; (2) the loss and destruction of the original or the reason for its non-production in court; and (3) on the part of the offeror, the absence of bad faith to which the unavailability of the original can be attributed. The correct order of proof is as follows: existence, execution, loss, and contents. 28

In the case at bar, Lagman mentioned during the direct examination that there are actually four (4) duplicate originals of the 1990 Bond: the first is kept by the NFA, the second is with the Loan Officer of the NFA in Tarlac, the third is with Country Bankers and the fourth was in his possession. 29 A party must first present to the court proof of loss or other satisfactory explanation for the non-production of the original instrument. 30  When more than one original copy exists, it must appear that all of them have been lost, destroyed, or cannot be produced in court before secondary evidence can be given of any one. A photocopy may not be used without accounting for the other originals. 31

Despite knowledge of the existence and whereabouts of these duplicate originals, Lagman merely presented a photocopy.  He admitted that he kept a copy of the 1990 Bond but he could no longer produce it because he had already severed his ties with Country Bankers.  However, he did not explain why severance of ties is by itself reason enough for the non-availability of his copy of the bond considering that, as it appears from the 1989 Bonds, Lagman himself is a bondsman. Neither did Lagman explain why he failed to secure the original from any of the three other custodians he mentioned in his testimony.  While he apparently was able to find the original with the NFA Loan Officer, he was merely contented with producing its photocopy.  Clearly, Lagman failed to exert diligent efforts to produce the original.

Fueling further suspicion regarding the existence of the 1990 Bond is the absence of an Indemnity Agreement.  While Lagman argued that a 1990 Bond novates the 1989 Bonds, he raises the defense of "non-existence of an indemnity agreement" which would conveniently exempt him from liability. The trial court deemed this defense as indicia of bad faith, thus:

To the observation of the Court, defendant Lagman contended that being a general agent (which requires a much higher qualification than an ordinary agent), he is expected to have attended seminars and workshops on general insurance wherein he is supposed to have acquired sufficient knowledge of the general principles of insurance which he had fully practised or implemented from experience.  It somehow appears to the Court's assessment of his reneging liability of the bonds in question, that he is still short of having really understood the principle of suretyship with reference to the transaction of indemnity in which he is a signatory. If, as he alleged, that he is well-versed in insurance, the Court finds no excuse for him to stand firm in denying his liability over the claim against the bonds with indemnity provision.  If he insists in not recognizing that liability, the more that this Court is convinced that his knowledge that insurance operates under the principle of good faith is inadequate.  He missed the exception provided by Section 177 of the Insurance Code, as amended, wherein non-payment of premium would not have the same essence in his mind that the agreements entered into would not have full force or effect.  It could be glimpsed, therefore, that the mere fact of cancelling bonds with indemnity agreements and replacing them (absence of the same) to escape liability clearly manifests bad faith on his part. 32 (Emphasis supplied.)

Having discounted the existence and/or validity of the 1990 Bond, there can be no novation to speak of.  Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor.  For novation to take place, the following requisites must concur: 1) There must be a previous valid obligation; 2) The parties concerned must agree to a new contract; 3) The old contract must be extinguished; and 4) There must be a valid new contract. 33

In this case, only the first element of novation exists.  Indeed, there is a previous valid obligation, i.e., the 1989 Bonds.  There is however neither a valid new contract nor a clear agreement between the parties to a new contract since the very existence of the 1990 Bond has been rendered dubious.  Without the new contract, the old contract is not extinguished.

Implied novation necessitates a new obligation with which the old is in total incompatibility such that the old obligation is completely superseded by the new one. 34 Quite obviously, neither can there be implied novation.  In this case, there is no new obligation.

The liability of Lagman is expressed in Indemnity Agreements executed in consideration of the 1989 Bonds which we have considered as continuing contracts.  Under both Indemnity Agreements, Lagman, as co-signor, together with Santos, Ban Lee Lim and Reguine, bound themselves jointly and severally to Country Bankers to indemnify it for any damage or loss sustained on the account of the execution of the bond, among others.  The pertinent identical stipulations of the Indemnity Agreements state:

INDEMNITY: ? To indemnify and make good to the COMPANY jointly and severally, any damages, prejudice, loss, costs, payments advances and expenses of whatever kind and nature, including attorney's fees and legal costs, which the COMPANY may, at any time, sustain or incur, as well as to reimburse to said COMPANY all sums and amounts of money which the COMPANY or its representatives shall or may pay or cause to be paid or become liable to pay, on account of or arising from the execution of the above-mentioned BOND or any extension, renewal, alteration or substitution thereof made at the instance of the undersigned or anyone of them. 35

Moreover, the Indemnity Agreements also contained identical Incontestability Clauses which provide:

INCONTESTABILITY OF PAYMENTS MADE BY THE COMPANY: ? Any payment or disbursement made by the COMPANY on account of the above-mentioned Bond, its renewals, extensions, alterations or substitutions either in the belief that the COMPANY was obligated to make such payment or in the belief that said payment was necessary or expedient in order to avoid greater losses or obligations for which the COMPANY might be liable by virtue of the terms of the above-mentioned Bond, its renewals, extensions, alterations, or substitutions, shall be final and shall not be disputed by the undersigned, who hereby jointly and severally bind themselves to indemnify [Country Bankers] of any and all such payments, as stated in the preceding clauses.

In case the COMPANY shall have paid[,] settled or compromised any liability, loss, costs, damages, attorney's fees, expenses, claims[,] demands, suits, or judgments as above-stated, arising out of or in connection with said bond, an itemized statement thereof, signed by an officer of the COMPANY and other evidence to show said payment, settlement or compromise, shall be prima facie evidence of said payment, settlement or compromise, as well as the liability of the undersigned in any and all suits and claims against the undersigned arising out of said bond or this bond application.36

Lagman is bound by these Indemnity Agreements.  Payments made by Country Bankers by virtue of the 1989 Bonds gave rise to Lagman's obligation to reimburse it under the Indemnity Agreements.  Lagman, being a solidary debtor, is liable for the entire obligation.

WHEREFORE, the petition is GRANTED.  The assailed Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 61797 are SET ASIDE and the Decision dated 21 September 1998 of the RTC is hereby REINSTATED.

SO ORDERED.

Carpio, (Chairperson), Leonardo De Castro,* Villarama, Jr.,** and Sereno, JJ., concur.

Endnotes:

3 As amended by Republic Act No. 247 (An Act to Amend Act No. 3893), Presidential Decree No. 4 (Creating the National Grain Authority) and Presidential Decree No. 1770 (Creating the National Food Authority).

8 Santos obtained a loan from Far East Bank and Trust Co. and which was guaranteed by Quedan Rural Credit Guarantee Corporation (Quedancor). He obtained a P4 Million loan, as evidenced by two (2) Promissory Notes under the Quedan Financing For Grain Stocks program which matures on 29 January 1991.  Santos executed a Pledge Agreement using his Quedan Warehouse Receipts covering the sacks of palay to guarantee payment of said loans.  Quedancor then issued a Certificate of Guarantee Coverage upon request of FEBTC.  Records, pp. 214-219 and 225.

10 The NFA, acting in behalf of Quedancor, proceeded against the surety bonds issued by Country Bankers which, in turn, partially paid P1,166,750.37 to Quedancor and left a balance of P1,233,749.50.  Id. at 233-234.

11 Answer with Affirmative and Special Defenses and Counterclaim.  Rollo, pp. 61-63.

16 Presided by Judge Zenaida R. Daguna.  Rollo, pp. 81-86.

29 Testimony of Antonio Lagman.  TSN, 29 April 1997, pp. 12-13.

108

[G.R. No. 177407, February 09 : 2011]

RICO ROMMEL ATIENZA, PETITIONER, VS. BOARD OF MEDICINE AND EDITHA SIOSON, RESPONDENTS.

D E C I S I O N

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision1 dated September 22, 2006 of the Court of Appeals (CA) in CA-G.R. SP No. 87755. The CA dismissed the petition for certiorari filed by petitioner Rico Rommel Atienza (Atienza), which, in turn, assailed the Orders2 issued by public respondent Board of Medicine (BOM) in Administrative Case No. 1882.

The facts, fairly summarized by the appellate court, follow.

Due to her lumbar pains, private respondent Editha Sioson went to Rizal Medical Center (RMC) for check-up on February 4, 1995. Sometime in 1999, due to the same problem, she was referred to Dr. Pedro Lantin III of RMC who, accordingly, ordered several diagnostic laboratory tests. The tests revealed that her right kidney is normal. It was ascertained, however, that her left kidney is non-functioning and non-visualizing. Thus, she underwent kidney operation in September, 1999.

On February 18, 2000, private respondent's husband, Romeo Sioson (as complainant), filed a complaint for gross negligence and/or incompetence before the [BOM] against the doctors who allegedly participated in the fateful kidney operation, namely: Dr. Judd dela Vega, Dr. Pedro Lantin, III, Dr. Gerardo Antonio Florendo and petitioner Rico Rommel Atienza.

It was alleged in the complaint that the gross negligence and/or incompetence committed by the said doctors, including petitioner, consists of the removal of private respondent's fully functional right kidney, instead of the left non-functioning and non-visualizing kidney.

The complaint was heard by the [BOM]. After complainant Romeo Sioson presented his evidence, private respondent Editha Sioson, also named as complainant there, filed her formal offer of documentary evidence. Attached to the formal offer of documentary evidence are her Exhibits "A" to "D," which she offered for the purpose of proving that her kidneys were both in their proper anatomical locations at the time she was operated. She described her exhibits, as follows:

"EXHIBIT 'A' - the certified photocopy of the X-ray Request form dated December 12, 1996, which is also marked as Annex '2' as it was actually originally the Annex to x x x Dr. Pedro Lantin, III's counter affidavit filed with the City Prosecutor of Pasig City in connection with the criminal complaint filed by [Romeo Sioson] with the said office, on which are handwritten entries which are the interpretation of the results of the ultrasound examination. Incidentally, this exhibit happens to be the same as or identical to the certified photocopy of the document marked as Annex '2' to the Counter-Affidavit dated March 15, 2000, filed by x x x Dr. Pedro Lantin, III, on May 4, 2000, with this Honorable Board in answer to this complaint;

"EXHIBIT 'B' - the certified photo copy of the X-ray request form dated January 30, 1997, which is also marked as Annex '3' as it was actually likewise originally an Annex to x x x Dr. Pedro Lantin, III's counter-affidavit filed with the Office of the City Prosecutor of Pasig City in connection with the criminal complaint filed by the herein complainant with the said office, on which are handwritten entries which are the interpretation of the results of the examination. Incidentally, this exhibit happens to be also the same as or identical to the certified photo copy of the document marked as Annex '3' which is likewise dated January 30, 1997, which is appended as such Annex '3' to the counter-affidavit dated March 15, 2000, filed by x x x Dr. Pedro Lantin, III on May 4, 2000, with this Honorable Board in answer to this complaint.

"EXHIBIT 'C' - the certified photocopy of the X-ray request form dated March 16, 1996, which is also marked as Annex '4,' on which are handwritten entries which are the interpretation of the results of the examination.

"EXHIBIT 'D' - the certified photocopy of the X-ray request form dated May 20, 1999, which is also marked as Annex '16,' on which are handwritten entries which are the interpretation of the results of the examination. Incidentally, this exhibit appears to be the draft of the typewritten final report of the same examination which is the document appended as Annexes '4' and '1' respectively to the counter-affidavits filed by x x x Dr. Judd dela Vega and Dr. Pedro Lantin, III in answer to the complaint. In the case of Dr. dela Vega however, the document which is marked as Annex '4' is not a certified photocopy, while in the case of Dr. Lantin, the document marked as Annex '1' is a certified photocopy. Both documents are of the same date and typewritten contents are the same as that which are written on Exhibit 'D.'

Petitioner filed his comments/objections to private respondent's [Editha Sioson's] formal offer of exhibits. He alleged that said exhibits are inadmissible because the same are mere photocopies, not properly identified and authenticated, and intended to establish matters which are hearsay. He added that the exhibits are incompetent to prove the purpose for which they are offered.

Dispositions of the Board of Medicine

The formal offer of documentary exhibits of private respondent [Editha Sioson] was admitted by the [BOM] per its Order dated May 26, 2004. It reads:

"The Formal Offer of Documentary Evidence of [Romeo Sioson], the Comments/Objections of [herein petitioner] Atienza, [therein respondents] De la Vega and Lantin, and the Manifestation of [therein] respondent Florendo are hereby ADMITTED by the [BOM] for whatever purpose they may serve in the resolution of this case.

"Let the hearing be set on July 19, 2004 all at 1:30 p.m. for the reception of the evidence of the respondents.

"SO ORDERED."

Petitioner moved for reconsideration of the abovementioned Order basically on the same reasons stated in his comment/objections to the formal offer of exhibits.

The [BOM] denied the motion for reconsideration of petitioner in its Order dated October 8, 2004. It concluded that it should first admit the evidence being offered so that it can determine its probative value when it decides the case. According to the Board, it can determine whether the evidence is relevant or not if it will take a look at it through the process of admission. x x x.3

Disagreeing with the BOM, and as previously adverted to, Atienza filed a petition for certiorari with the CA, assailing the BOM's Orders which admitted Editha Sioson's (Editha's) Formal Offer of Documentary Evidence. The CA dismissed the petition for certiorari for lack of merit.

Hence, this recourse positing the following issues:

I. PROCEDURAL ISSUE:

WHETHER PETITIONER ATIENZA AVAILED OF THE PROPER REMEDY WHEN HE FILED THE PETITION FOR CERTIORARI DATED 06 DECEMBER 2004 WITH THE COURT OF APPEALS UNDER RULE 65 OF THE RULES OF COURT TO ASSAIL THE ORDERS DATED 26 MAY 2004 AND 08 OCTOBER 2004 OF RESPONDENT BOARD.

II. SUBSTANTIVE ISSUE:

WHETHER THE COURT OF APPEALS COMMITTED GRAVE REVERSIBLE ERROR AND DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORDANCE WITH LAW AND THE APPLICABLE DECISIONS OF THE HONORABLE COURT WHEN IT UPHELD THE ADMISSION OF INCOMPETENT AND INADMISSIBLE EVIDENCE BY RESPONDENT BOARD, WHICH CAN RESULT IN THE DEPRIVATION OF PROFESSIONAL LICENSE - A PROPERTY RIGHT OR ONE'S LIVELIHOOD.4

We find no reason to depart from the ruling of the CA.

Petitioner is correct when he asserts that a petition for certiorari is the proper remedy to assail the Orders of the BOM, admitting in evidence the exhibits of Editha. As the assailed Orders were interlocutory, these cannot be the subject of an appeal separate from the judgment that completely or finally disposes of the case.5 At that stage, where there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law, the only and remaining remedy left to petitioner is a petition for certiorari under Rule 65 of the Rules of Court on the ground of grave abuse of discretion amounting to lack or excess of jurisdiction.

However, the writ of certiorari will not issue absent a showing that the BOM has acted without or in excess of

jurisdiction or with grave abuse of discretion. Embedded in the CA's finding that the BOM did not exceed its jurisdiction or act in grave abuse of discretion is the issue of whether the exhibits of Editha contained in her Formal Offer of Documentary Evidence are inadmissible.

Petitioner argues that the exhibits formally offered in evidence by Editha: (1) violate the best evidence rule; (2) have not been properly identified and authenticated; (3) are completely hearsay; and (4) are incompetent to prove their purpose. Thus, petitioner contends that the exhibits are inadmissible evidence.

We disagree.

To begin with, it is well-settled that the rules of evidence are not strictly applied in proceedings before administrative bodies such as the BOM.6 Although trial courts are enjoined to observe strict enforcement of the rules of evidence,7 in connection with evidence which may appear to be of doubtful relevancy, incompetency, or admissibility, we have held that:

[I]t is the safest policy to be liberal, not rejecting them on doubtful or technical grounds, but admitting them unless plainly irrelevant, immaterial or incompetent, for the reason that their rejection places them beyond the consideration of the court, if they are thereafter found relevant or competent; on the other hand, their admission, if they turn out later to be irrelevant or incompetent, can easily be remedied by completely discarding them or ignoring them.8

From the foregoing, we emphasize the distinction between the admissibility of evidence and the probative weight to be accorded the same pieces of evidence. PNOC Shipping and Transport Corporation v. Court of Appeals9 teaches:

Admissibility of evidence refers to the question of whether or not the circumstance (or evidence) is to be considered at all. On the other hand, the probative value of evidence refers to the question of whether or not it proves an issue.

Second, petitioner's insistence that the admission of Editha's exhibits violated his substantive rights leading to the loss of his medical license is misplaced. Petitioner mistakenly relies on Section 20, Article I of the Professional Regulation Commission Rules of Procedure, which reads:

Section 20. Administrative investigation shall be conducted in accordance with these Rules. The Rules of Court shall only apply in these proceedings by analogy or on a suppletory character and whenever practicable and convenient. Technical errors in the admission of evidence which do not prejudice the substantive rights of either party shall not vitiate the proceedings.10

As pointed out by the appellate court, the admission of the exhibits did not prejudice the substantive rights of petitioner because, at any rate, the fact sought to be proved thereby, that the two kidneys of Editha were in their proper anatomical locations at the time she was operated on, is presumed under Section 3, Rule 131 of the Rules of Court:

Sec. 3. Disputable presumptions. - The following presumptions are satisfactory if uncontradicted, but may be contradicted and overcome by other evidence:

x x x x

(y) That things have happened according to the ordinary course of nature and the ordinary habits of life.

The exhibits are certified photocopies of X-ray Request Forms dated December 12, 1996, January 30, 1997, March 16, 1996, and May 20, 1999, filed in connection with Editha's medical case. The documents contain handwritten entries interpreting the results of the examination. These exhibits were actually attached as annexes to Dr. Pedro Lantin III's counter affidavit filed with the Office of the City Prosecutor of Pasig City, which was investigating the criminal complaint for negligence filed by Editha against the doctors of Rizal Medical Center (RMC) who handled her surgical procedure. To lay the predicate for her case, Editha offered the exhibits in evidence to prove that her "kidneys were both in their proper anatomical locations at the time" of her operation.

The fact sought to be established by the admission of Editha's exhibits, that her "kidneys were both in their proper anatomical locations at the time" of her operation, need not be proved as it is covered by mandatory judicial notice.11

Unquestionably, the rules of evidence are merely the means for ascertaining the truth respecting a matter of fact.12 Thus, they likewise provide for some facts which are established and need not be proved, such as those covered by judicial notice, both mandatory and discretionary.13 Laws of nature involving the physical sciences, specifically biology,14 include the structural make-up and composition of living things such as human beings. In this case, we may take judicial notice that Editha's kidneys before, and at the time of, her operation, as with most human beings, were in their proper anatomical locations.

Third, contrary to the assertion of petitioner, the best evidence rule is inapplicable. Section 3 of Rule 130 provides:

1. Best Evidence Rule

Sec. 3. Original document must be produced; exceptions. - When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:

(a) When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;

(b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and

(d) When the original is a public record in the custody of a public officer or is recorded in a public office.

The subject of inquiry in this case is whether respondent doctors before the BOM are liable for gross negligence in removing the right functioning kidney of Editha instead of the left non-functioning kidney, not the proper anatomical locations of Editha's kidneys. As previously discussed, the proper anatomical locations of Editha's kidneys at the time of her operation at the RMC may be established not only through the exhibits offered in evidence.

Finally, these exhibits do not constitute hearsay evidence of the anatomical locations of Editha's kidneys. To further drive home the point, the anatomical positions, whether left or right, of Editha's kidneys, and the removal of one or both, may still be established through a belated ultrasound or x-ray of her abdominal area.

In fact, the introduction of secondary evidence, such as copies of the exhibits, is allowed.15 Witness Dr. Nancy Aquino testified that the Records Office of RMC no longer had the originals of the exhibits "because [it] transferred from the previous building, x x x to the new building."16 Ultimately, since the originals cannot be produced, the BOM properly admitted Editha's formal offer of evidence and, thereafter, the BOM shall determine the probative value thereof when it decides the case.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals in CA-G.R. SP No. 87755 is AFFIRMED.  Costs against petitioner.

SO ORDERED.

Peralta, Del Castillo,* Villarama, Jr.,** and Mendoza, JJ., concur.

Endnotes:7 Francisco, EVIDENCE RULES 128-134 (3rd ed. 1996), p. 9.

11 RULES OF COURT, Rule 129, Sec. 1.

SECTION 1. Judicial notice, when mandatory. - A court shall take judicial notice, without the introduction of evidence, of the existence and territorial extent of states, their political history, forms of government and symbols of nationality, the law of nations, the admiralty and maritime courts of the world and their seals, the political constitution and history of the Philippines, the official acts of the legislative, executive and judicial departments of the Philippines, the laws of nature, the measure of time, and the geographical divisions.

12 RULES OF COURT, Rule 128, Sec. 1.

13 RULES OF COURT, Rule 129, Sec. 2.

SEC. 2. Judicial notice, when discretionary. - A court may take judicial notice of matters which are of public knowledge, or are capable of unquestionable demonstration, or ought to be known to judges because of their judicial functions.

14 Science of life, definition of Webster's Third New International Dictionary.

15 RULES OF COURT, Rule 130, Sec. 5.

123[G.R. No. 172196 : October 19, 2011]

ADELAIDA MENESES (DECEASED), SUBSTITUTED BY HER HEIR MARILYN M. CARBONEL-GARCIA, PETITIONER, VS. ROSARIO G. VENTUROZO, RESPONDENT.

This is a petition for review on certiorari1 of the Court of Appeals' Decision dated October 27, 2005 in CA-G.R. CV No. 78217 and its Resolution dated April 5, 2006, denying petitioner's motion for reconsideration.

The Court of Appeals' Decision reversed and set aside the Decision of the Regional Trial Court (RTC) of Dagupan City, Branch 40 in Civil Case No. D-9040, as the appellate court declared respondent Rosario G. Venturozo the owner of the land in dispute, and ordered petitioner Adelaida Meneses to vacate and surrender her possession thereof to respondent.

The facts are as follows:

On June 8, 1988, plaintiff Rosario G. Venturozo, respondent herein, filed a Complaint2 for "ownership, possession x x x and damages" in the Regional Trial Court (RTC) of Dagupan City against defendant Adelaida Meneses, petitioner herein, alleging that she (plaintiff) is the absolute owner of an untitled coconut land, containing an area of 2,109 square meters, situated at Embarcadero, Mangaldan, Pangasinan, and declared under Tax Declaration No. 239.  Plaintiff  alleged that she purchased the property from the spouses Basilio de Guzman and Crescencia Abad on January 31, 1973 as evidenced by a Deed of Absolute Sale,3 and that the vendors, in turn, purchased the property from defendant  as evidenced by a Deed of Absolute Sale4 dated June 20, 1966.  Plaintiff alleged that she has been in possession of the land until May 1983 when defendant with some armed men grabbed possession of the land and refused to vacate despite repeated demands prompting  her to engage the services of counsel.  Plaintiff prayed that after preliminary hearing, a writ of preliminary mandatory injunction be issued; and that after hearing, a decision be rendered declaring her as the owner of the property in dispute, ordering defendant to vacate the property in question and to pay her P5,000.00 as attorney's fees; P1,000.00 as litigation expenses; P10,000.00 as damages and to pay the costs of suit.

In her Answer,5 defendant Adelaida Meneses stated that plaintiff is the daughter of Basilio de Guzman, the vendee in the Deed of Absolute Sale dated June 20, 1966 that was purportedly executed by her (defendant) covering the subject property.  Defendant alleged that she never signed any Deed of Absolute Sale dated June 20, 1966, and that the said deed is a forgery.  Defendant also alleged that she never appeared before any notary public, and she did not obtain a residence certificate; hence, her alleged sale of the subject property to Basilio de Guzman is null and void ab initio.  Consequently, the Deed of Absolute Sale dated January 31, 1973, executed by Basilio de Guzman in favor of plaintiff, covering the subject property, is likewise null and void. Defendant stated that she acquired the subject property from her deceased father and she has been in possession of the land for more than 30 years in the concept of owner.  Plaintiff's allegation that she (defendant) forcibly took possession of the land is a falsehood. Defendant stated that this is the fourth case the plaintiff filed against her concerning the land in question.

In her Counterclaim, defendant stated that in view of the nullity of the falsified Deed of Absolute Sale of the subject property, and the fact that plaintiff and her father Basilio de Guzman had never been in actual possession of the property, plaintiff is under legal obligation to execute a deed of reconveyance over the said property in her favor.

The issue before the trial court was whether the sale made by defendant Adelaida Meneses in favor of plaintiff's father, Basilio de Guzman, was valid.6

On July 18, 1991, the RTC of Dagupan City, Branch 40 (trial court) rendered a Decision in favor of defendant Adelaida Meneses.  The dispositive portion of the Decision reads:

WHEREFORE, judgment is hereby rendered:

1) Declaring the Deed of Absolute and Definite Sale dated June 20, 1966 (Exhibit "B") and the Deed of Absolute and Definite Sale dated January 31, 1973 (Exhibit "A") null and void ab initio;

2) Declaring the defendant Adelaida Meneses as the owner of the property in question;

3) Ordering the plaintiff Rosario G. Venturozo to execute a Deed of Reconveyance in favor of the defendant Adelaida Meneses over the property in question described in paragraph 2 of the complaint;

4) Ordering the plaintiff to pay to the defendant P10,000.00 as damages; and P1,000.00, as litigation expenses.

SO ORDERED.7

The trial court found that defendant Adelaida Meneses inherited the land in dispute from her father, Domingo Meneses; that she did not sell her property to Basilio de Guzman in 1966; and that the signature of Adelaida Meneses on the Deed of Absolute Sale dated June 20, 1966 is a forgery.  The trial court stated that the signature of Adelaida Meneses, as appearing on the Deed of Absolute Sale dated June 20, 1966, is very much different from her specimen signatures and those appearing in the records of Civil Case No. 1096 in the Municipal Trial Court of Mangaldan.  It held that since there was no valid transfer of the property by Adelaida Meneses to Basilio de Guzman, the conveyance of the same property in 1973 by Basilio de Guzman to his daughter, plaintiff Rosario G. Venturozo, was also invalid.  The trial court stated that the claim of plaintiff Rosario G. Venturozo, that her parents, Spouses Basilio and Crescencia de Guzman, purchased from defendant Adelaida Meneses the subject property in 1966, is negated by defendant's continued possession of the land and she gathered the products therefrom.

Plaintiff appealed the decision of the trial court to the Court of Appeals.

On October 27, 2005, the Court of Appeals rendered a Decision reversing the decision of the trial court. The dispositive portion of the appellate court's decision reads:

WHEREFORE, the appealed decision of the Regional Trial Court of  Dagupan City (Branch 40) is REVERSED and SET ASIDE and a new one rendered declaring plaintiff-appellant the owner of the subject land and ordering defendant-appellee to vacate and surrender possession thereof to the former.8

The Court of Appeals stated that appellee Adelaida Meneses failed to prove by clear and convincing evidence that her signature on the Deed of Absolute Sale dated June 20, 1966 was a forgery.  Instead, she admitted on direct examination that her signature on the Deed of Absolute Sale was genuine, thus:

Q I am showing to you Exhibit "6" and Exhibit "A" for the plaintiff a Deed of Absolute Sale o[f] Real Property of one (1) Adelaida Meneses in favor of Basilio de Guzman. Will you examine this if you know this Deed of Absolute Sale?

A.  I do not know this document, sir.

Q. There is a signature over the name of the vendor Adelaida Meneses which was previously marked as Exhibit "6-a" and Exhibit "A-1" for the plaintiff, will you examine this signature, if do you (sic) know this signature?

A.  This is my signature, sir.9

According to the Court of Appeals, such admission is binding on her, there being no showing that it was made through palpable mistake or that no such admission was made.10

The Court of Appeals also stated that mere variance of signatures cannot be considered as conclusive proof that the same were forged, as forgery cannot be presumed.11 Appellee Adelaida Meneses should have produced specimen signatures appearing on documents executed in or about the year 1966 for a better comparison and analysis.12

The Court of Appeals held that a notarized document, like the questioned Deed of Absolute Sale dated June 20, 1966, has in its favor the presumption of regularity, and to overcome the same, there must be evidence that is clear, convincing and more than merely preponderant; otherwise, the document should be upheld.13  Moreover, Atty. Abelardo G. Biala ’ the notary public before whom the questioned Deed of Sale was acknowledged ’ testified and confirmed its genuineness and due execution, particularly the signature in question.  The appellate court stated that as against appellee Adelaida Meneses' version, Atty. Biala's testimony, that appellee appeared before him and acknowledged that the questioned deed was her free and voluntary act, is more credible. The testimony of a notary public enjoys greater credence than that of an ordinary witness.14

The Court of Appeals held that appellee Adelaida Meneses failed to present clear and convincing evidence to overcome the evidentiary force of the questioned Deed of Absolute Sale dated June 1966, which appears on its face to have been executed with all the formalities required by law.

Adelaida Meneses' motion for reconsideration was denied for lack of merit by the Court of Appeals in a Resolution15 dated April 5, 2006.

Hence, Adelaida Meneses, substituted by her heir, filed this petition raising this lone issue:

I

WHETHER THE DECISION OF THE COURT OF APPEALS, WHICH REVERSED THE DECISION OF THE REGIONAL TRIAL COURT, IS IN KEEPING WITH BOTH LAW AND JURISPRUDENCE.16

Petitioner contends that her statement, made during the course of her testimony in the trial court, was taken out of context by respondent to be used merely as an argumentative point. The examining lawyer used the words, "Do you know this signature?" viz.:

Q.  I am showing to you Exhibit "6" and Exhibit "A" for the plaintiff a Deed of Absolute Sale o[f] Real Property of one (1) Adelaida Meneses in favor of Basilio de Guzman. Will you examine this if you know this Deed of Absolute Sale?

A.  I do not know this document, sir.

Q. There is a signature over the name of the vendor Adelaida Meneses which was previously marked as Exhibit "6-a" and Exhibit "A-1" for the plaintiff, will you examine this signature, if do you (sic) know this signature?

A.  This is my signature, sir.17

Petitioner contends that in the above-quoted transcript of stenographic notes, she was merely asked if she was cognizant of such a signature as hers or whether the signature appearing on the questioned document was similar to that of her signature, and not if she was the one who indeed affixed such signature on the said deed of sale.

She avers that the general rule that a judicial admission is conclusive upon the party invoking it and does not require proof admits of two exceptions: (1) when it is shown that the admission was made through palpable mistake; and (2) when it is shown that no such admission was in fact made.  The latter exception allows one to contradict an admission by denying that he made such an admission.  For instance, if a party invokes an "admission" by an adverse party, but cites the admission "out of context," then the one making the admission may show that he made no such admission, or that his admission was taken out of context.18  This may be interpreted as to mean not in the sense in which the admission is made to appear.19

Petitioner also contends that a comparison of the signature on the Deed of Absolute Sale dated June 20, 1966 and her specimen signatures, as well as her genuine signature on pleadings, were made by the trial court, and it ruled that her signature on the Deed of Absolute Sale dated June 20, 1966 was a forgery.  She submits that the trial court's evaluation of the credibility of witnesses and their testimonies is entitled to great respect,20 and the appellate court should have given weight to the trial court's findings that her signature on the said Deed of Absolute Sale was a forgery.

The petition is meritorious.

The rule is that the jurisdiction of the Court over appealed cases from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the appellate court, as its findings of fact are deemed conclusive.21  Thus, this Court is not duty-bound to analyze and weigh all over again the evidence already considered in the proceedings below.22 However, this rule admits exceptions,23 such as when the findings of fact of the Court of Appeals are contrary to the findings and conclusions of the trial court24 like in this case.

The necessity of a public document for contracts which transmit or extinguish real rights over immovable property, as mandated by Article 1358 of the Civil Code,25 is only for convenience; it is not essential for validity or enforceability.26 As notarized documents, Deeds of Absolute Sale carry evidentiary weight conferred upon them with respect to their due execution27 and enjoy the presumption of regularity which may only be rebutted by evidence so clear, strong and convincing as to exclude all controversy as to falsity.28 The presumptions that attach to notarized documents can be affirmed only so long as it is beyond dispute that the notarization was regular.29 A defective notarization will strip the document of its public character and reduce it to a private instrument.30  Consequently, when there is a defect in the notarization of a document, the clear and convincing evidentiary standard normally attached to a duly-notarized document is dispensed with, and the measure to test the validity of such document is preponderance of evidence.31

In this case, it should be pointed out that contrary to the finding of the Court of Appeals, the Deed of Sale dated June 20, 1966 did not comply with the formalities required by law, specifically Act No. 496,32 otherwise known as The Land Registration Act, which took effect on January 1, 1903, as Section 127 of the Act provides:

FORMS

Section 127.  Deeds, conveyances, mortgages, leases, releases, and discharges affecting lands, whether registered under this Act or unregistered, shall be sufficient in law when made substantially in accordance

with the following forms, and shall be as effective to convey, encumber, lease, release, discharge, or bind the lands as though made in accordance with the more prolix form heretofore in use: Provided, That every such instrument shall be signed by the person or persons executing the same, in the presence of two witnesses, who shall sign the instrument as witnesses to the execution thereof, and shall be acknowledged to be his or their free act and deed by the person or persons executing the same, before the judge of a court of record or clerk of a court of record, or a notary public, or a justice of the peace, who shall certify to such acknowledgment x x x.33

In the Deed of Absolute Sale dated June 20, 1966, the Notary Public signed his name as one of the two witnesses to the execution of the said deed; hence, there was actually only one witness thereto. Moreover, the residence certificate of petitioner was issued to petitioner and then it was given to the Notary Public the day after the execution of the deed of sale and notarization; hence, the number of petitioner's residence certificate and the date of issuance (June 21, 1966) thereof was written on the Deed of Absolute Sale by the Notary Public on June 21, 1966, after the execution and notarization of the said deed on June 20, 1966.34 Considering the defect in the notarization, the Deed of Absolute Sale dated June 20, 1966 cannot be considered a public document, but only a private document,35 and the evidentiary standard of its validity shall be based on preponderance of evidence.

Section 20, Rule 132  of the Rules of Court provides that before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either: (a) by anyone who saw the document executed or written; or (b) by evidence of the genuineness of the signature or handwriting of the maker.

In regard to the genuineness of petitioner's signature appearing on the Deed of Absolute Sale dated June 20, 1966,36 the Court agrees with the trial court that her signature therein is very much different from her specimen signatures37 and those appearing in the pleadings38 of other cases filed against her, even considering the difference of 17 years when the specimen signatures were made. Hence, the Court rules that petitioner's signature on the Deed of Absolute Sale dated June 20, 1966 is a forgery.

The Court agrees with petitioner that her admission was taken out of context, considering that in her Answer39 to the Complaint, she stated that the alleged Deed of Sale purportedly executed by her in favor of Basilio de Guzman is a forgery; that she never signed the said Deed of Sale; that she did not appear personally before the Notary Public; and that she did not secure the residence certificate mentioned in the said Deed of Sale. She also testified that she never sold her land to Basilio de Guzman;40 that she never met the Notary Public, Attorney Abelardo Biala,41 and that she did not meet Basilio de Guzman on June 20, 1966.42  The trial court found petitioner and her testimony to be credible, and declared the Deed of Sale dated June 20, 1966 null and void ab initio.  These circumstances negate the said admission.

The Court finds the Notary Public's testimony self-serving and unreliable, because although he testified that petitioner was the one who submitted her residence certificate to him on June 21, 1966,43 the next day after the Deed of Absolute Sale was executed on June 20, 1966, Crescencia de Guzman, respondent's mother, testified that she and her husband got the residence certificate from petitioner and gave it to the Notary Public on June 21, 1966.44 Thus, it is doubtful whether the Notary Public really knew the identity of the vendor who signed the Deed of Absolute Sale45 dated June 20, 1966.

The Court notes that the trial court found petitioner and her testimony to be credible. It is a well-settled doctrine that findings of trial courts on the credibility of witnesses deserve a high degree of respect.46  Having observed the deportment of witnesses during the trial, the trial judge is in a better position to determine the issue of credibility.47

In fine, the preponderance of evidence is with petitioner.

WHEREFORE, the petition is GRANTED. The Court of Appeals' Decision dated October 27, 2005 and its Resolution dated April 5, 2006 in CA-G.R. CV No. 78217 are REVERSED and SET ASIDE,  and the Decision of the Regional Trial Court of Dagupan City, Branch 40 in Civil Case No. D-9040 is hereby REINSTATED.

No costs.

SO ORDERED.

Endnotes:

1 Under Rule 45 of the Rules of Court.6 Pre-Trial Order, id. at 18.10 Rules of Court, Rule 129, Sec. 4.25 Civil Code, Art. 1358.  The following must appear in a public document:(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of real property or of an interest therein are governed by Articles 1403, No. 2 and 1405.26 Pan Pacific Industrial Sales Co., Inc. v. Court of Appeals, G.R. No. 125283, February 10, 2006, 482 SCRA 164, 180.27 Rules of Court, Rule 132.SEC. 19.  Classes of documents.--For purposes of their presentation in evidence, documents are either public or private.

Public documents are:x x x x(b) Documents acknowledged before a notary public except last wills and testaments; x x x xx x x xSEC. 23.  Public documents as evidence. -- Documents consisting of entries in public records made in the performance of a duty by a public officer are prima facie evidence of the facts therein stated. All other public documents are evidence, even against a third person, of the fact which gave rise to their execution and of the date of the latter.x x x xSEC. 30. Proof of notarial documents. -- Every instrument duly acknowledged or proved and certified as provided by law, may be presented in evidence without further proof, the certificate of acknowledgement being prima facie evidence of the execution of the instrument of document involved.32 Entitled AN ACT TO PROVIDE FOR THE ADJUDICATION AND REGISTRATION OF TITLES TO LANDS IN THE PHILIPPINE ISLANDS.

109[G. R. No. 171701 : February 08, 2012]

REPUBLIC OF THE PHILIPPINES PETITIONER, VS. MA. IMELDA "IMEE" R. MARCOS-MANOTOC, FERDINAND "BONGBONG" R. MARCOS, JR., GREGORIO MA. ARANETA III, IRENE R. MARCOS-ARANETA, YEUNG CHUN FAN, YEUNG CHUN HO, YEUNG CHUN KAM, AND PANTRANCO EMPLOYEES ASSOCIATION (PEA)-PTGWO, RESPONDENTS.

D E C I S I O N

Before this Court is a Petition for Review filed by the Republic of the Philippines assailing the Resolutions1 issued by the Sandiganbayan in connection with an alleged portion of the Marcoses' supposed ill-gotten wealth.cralaw

This case involves P200 billion of the Marcoses' alleged accumulated ill-gotten wealth. It also includes the alleged use of the media networks IBC-13, BBC-2 and RPN-9 for the Marcos family's personal benefit; the alleged use of De Soleil Apparel for dollar salting; and the alleged illegal acquisition and operation of the bus company Pantranco North Express, Inc. (Pantranco).

The Facts

After the EDSA People Power Revolution in 1986, the first executive act of then President Corazon C. Aquino was to create the Presidential Commission on Good Government (PCGG). Pursuant to Executive Order No. 1, the PCGG was given the following mandate:

Sec. 2. The Commission shall be charged with the task of assisting the President in regard to the following matters:

(a) The recovery of all ill-gotten wealth accumulated by former President Ferdinand E. Marcos, his immediate family, relatives, subordinates and close associates, whether located in the Philippines or abroad, including the takeover or sequestration of all business enterprises and entities owned or controlled by them, during his administration, directly or through nominees, by taking undue advantage of their public office and/or using their powers, authority, influence, connections or relationship.(b) The investigation of such cases of graft and corruption as the President may assign to the Commission from time to time.(c) The adoption of safeguards to ensure that the above practices shall not be repeated in any manner under the new government, and the institution of adequate measures to prevent the occurrence of corruption.

Sec. 3. The Commission shall have the power and authority:

(a) To conduct investigation as may be necessary in order to accomplish and carry out the purposes of this order.(b) To sequester or place or cause to be placed under its control or possession any building or office wherein any ill-gotten wealth or properties may be found, and any records pertaining thereto, in order to prevent their destruction, concealment or disappearance which would frustrate or hamper the investigation or otherwise prevent the Commission from accomplishing its task.(c) To provisionally take over in the public interest or to prevent its disposal or dissipation, business enterprises and properties taken over by the government of the Marcos Administration or by entities or persons close to former President Marcos, until the transactions leading to such acquisition by the latter can be disposed of by the appropriate authorities.(d) To enjoin or restrain any actual or threatened commission of facts by any person or entity that may render moot and academic, or frustrate, or otherwise make ineffectual the efforts of the Commission to carry out its tasks under this order.(e) To administer oaths, and issue subpoena requiring the attendance and testimony of witnesses and/or the production of such books, papers, contracts, records, statement of accounts and other documents as may be material to the investigation conducted by the Commission.(f) To hold any person in direct or indirect contempt and impose the appropriate penalties, following the same procedures and penalties provided in the Rules of Court.

(g) To seek and secure the assistance of any office, agency or instrumentality of the government.(h) To promulgate such rules and regulations as may be necessary to carry out the purpose of this order.

Thus, numerous civil and criminal cases were subsequently filed. One of the civil cases filed before the Sandiganbayan to recover the Marcoses' alleged ill-gotten wealth was Civil Case No. 0002, now subject of this Petition.

On 16 July 1987, the PCGG, acting on behalf of the Republic and assisted by the Office of the Solicitor General (OSG), filed a Complaint for Reversion, Reconveyance, Restitution, Accounting and Damages against Ferdinand E. Marcos, who was later substituted by his estate upon his death; Imelda R. Marcos; and herein respondents Imee Marcos-Manotoc, Irene Marcos-Araneta, Bongbong Marcos, Tomas Manotoc, and Gregorio Araneta III.

On 1 October 1987, the PCGG filed an amended Complaint to add Constante Rubio as defendant.

Again on 9 February 1988, it amended the Complaint, this time to include as defendants Nemesio G. Co and herein respondents Yeung Chun Kam, Yeung Chun Ho, and Yeung Chun Fan.

For the third time, on 23 April 1990, the PCGG amended its Complaint, adding to its growing list of defendants Imelda Cojuangco, the estate of Ramon Cojuangco, and Prime Holdings, Inc.2

The PCGG filed a fourth amended Complaint, which was later denied by the Sandiganbayan in its Resolution dated 2 September 1998.

The allegations contained in the Complaint specific to herein respondents are the following:3

29. Defendants Imelda (IMEE) R. Marcos-Manotoc, Tomas Manotoc, Irene R. Manotoc (sic) Araneta, Gregorio Ma. Araneta III, and Ferdinand R. Marcos, Jr., actively collaborated, with Defendants Ferdinand E. Marcos and Imelda R. Marcos among others, in confiscating and/or unlawfully appropriating funds and other property, and in concealing the same as described above. In addition, each of the said Defendants, either by taking undue advantage of their relationship with Defendants Ferdinand E. Marcos and Imelda R. Marcos, or by reason of the above-described active collaboration, unlawfully acquired or received property, shares of stocks in corporations, illegal payments such as commissions, bribes or kickbacks, and other forms of improper privileges, income, revenues and benefits. Defendant Araneta in particular made use of Asialand Development Corporation which is included in Annex "A" hereof as corporate vehicle to benefit in the manner stated above.

31. Defendants Nemesio G. Co, Yeung Chun Kam, Yeung Chun Ho and Yeung Chun Fan are the controlling stockholders of Glorious Sun Fashion Manufacturing Corporation (Phils.). Through Glorious Sun (Phils.), they acted as fronts or dummies, cronies or otherwise willing tools of spouses Ferdinand and Imelda Marcos and/or the family, particularly of Defendant Imelda (Imee) Marcos-Manotoc, in the illegal salting of foreign exchange4 by importing denim fabrics from only one supplier - a Hong Kong based corporation which was also owned and controlled by defendant Hong Kong investors, at prices much higher than those being paid by other users of similar materials to the grave and irreparable damage of Plaintiff.

Thus, petitioner set forth the following causes of action in its Complaint:5

32. First Cause of Action: BREACH OF PUBLIC TRUST - A public office is a public trust. By committing all the acts described above, Defendants repeatedly breached public trust and the law, making them liable solidarily to Plaintiff. The funds and other property acquired by Defendants following, or as a result of, their breach of public trust, some of which are mentioned or described above, estimated to amount to ?200 billion are deemed to have been acquired for the benefit of Plaintiff and are, therefore, impressed with constructive trust in favor of Plaintiff and the Filipino people. Consequently, Defendants are solidarily liable to restore or reconvey to Plaintiff all such funds and property thus impressed with constructive trust for the benefit of Plaintiff and the Filipino people.

33. Second Cause of Action: ABUSE OF RIGHT AND POWER -

(a) Defendants, in perpetrating the unlawful acts described above, committed abuse of right and power which caused untold misery, sufferings and damages to Plaintiff. Defendants violated, among others Articles 19, 20, and 21 of the Civil Code of the Philippines;

(b) As a result of the foregoing acts, Defendants acquired the title to the beneficial interest in funds and other property and concealed such title, funds and interest through the use of relatives, business associates, nominees, agents, or dummies. Defendants are, therefore, solidarily liable to Plaintiff to return and reconvey all such funds and other property unlawfully acquired by them estimated at TWO HUNDRED BILLION PESOS, or alternatively, to pay Plaintiff, solidarily, by way of indemnity, the damage caused to Plaintiff equivalent to the amount of such funds or the value of other property not returned or restored to Plaintiff, plus interest thereon from the date of unlawful acquisition until full payment thereof.

34. Third Cause of Action: UNJUST ENRICHMENT -

Defendants illegally accumulated funds and other property whose estimated value is P200 billion in violation of the laws of the Philippines and in breach of their official functions and fiduciary obligations. Defendants, therefore, have unjustly enriched themselves to the grave and irreparable damage and prejudice of Plaintiff. Defendants have an obligation at law, independently of breach of trust and abuse of right and power, and as an alternative, to solidarily return to Plaintiff such funds and other property with which Defendants, in gross evident bad faith, have unjustly enriched themselves or, in default thereof, restore to Plaintiff the amount of such funds and the value of the other property including those which may have been wasted, and/or lost estimated at P200 billion with interest thereon from the date of unlawful acquisition until full payment thereof.

35. Fourth Cause of Action: ACCOUNTING -

The Commission, acting pursuant to the provisions of the applicable law, believe that Defendants, acting singly or collectively, in unlawful concert with one another, and with the active collaboration of third persons, subject of separate suits, acquired funds, assets and property during the incumbency of Defendant public officers, manifestly out of proportion to their salaries, to their other lawful income and income from legitimately acquired property. Consequently, they are required to show to the satisfaction of this Honorable Court that they have lawfully acquired all such funds, assets and property which are in excess of their legal net income, and for this Honorable Court to decree that the Defendants are under obligation to account to Plaintiff with respect to all legal or beneficial interests in funds, properties and assets of whatever kind and wherever located in excess of the lawful earnings or lawful income from legitimately acquired property.

36.  Fifth Cause of Action - LIABILITY FOR DAMAGES -

(a) By reason of the unlawful acts set forth above, Plaintiff and the Filipino people have suffered actual damages in an amount representing the pecuniary loss sustained by the latter as a result of the Defendants' unlawful acts, the approximate value and interest of which, from the time of their wrongful acquisition, are estimated at P200 billion plus expenses which Plaintiff has been compelled to incur  and shall continue to incur in its effort to recover Defendants' ill-gotten wealth all over the world, which expenses are reasonably estimated at P250 million. Defendants are, therefore, jointly and severally liable to Plaintiff for actual damages in an amount reasonably estimated at P200 Billion Pesos and to reimburse expenses for recovery of Defendants' ill-gotten wealth estimated to cost P250 million or in such amount as are proven during the trial.

(b) As a result of Defendants' acts described above, Plaintiff and the Filipino people had painfully endured and suffered moral damages for more than twenty long years, anguish, fright, sleepless nights, serious anxiety, wounded feelings and moral shock as well as besmirched reputation and social humiliation before the international community.

(c) In addition, Plaintiff and the Filipino people are entitled to temperate damages for their sufferings which, by their very nature are incapable of pecuniary estimation, but which this Honorable Court may determine in the exercise of its sound discretion.

(d) Defendants, by reason of the above described unlawful acts, have violated and invaded the inalienable right of Plaintiff and the Filipino people to a fair and decent way of life befitting a Nation with rich natural and human resources. This basic and fundamental right of Plaintiff and the Filipino people should be recognized and vindicated by awarding nominal damages in an amount to be determined by the Honorable Court in the exercise of its sound discretion.

(e) By way of example and correction for the public good and in order to ensure that Defendants' unlawful, malicious, immoral and wanton acts are not repeated, said Defendants are solidarily liable to Plaintiff for exemplary damages.

In the meantime, the Pantranco Employees Association-PTGWO (PEA-PTGWO), a union of Pantranco employees, moved to intervene before the Sandiganbayan. The former alleged that the trust funds in the account of Pantranco North Express, Inc. (Pantranco) amounting to ?55 million rightfully belonged to the Pantranco employees, pursuant to the money judgment the National Labor Relations Commission (NLRC) awarded in favor of the employees and against Pantranco. Thus, PEA-PTGWO contested the allegation of petitioner that the assets of Pantranco were ill-gotten because, otherwise, these assets would be returned to the government and not to the employees.

Thereafter, petitioner presented and formally offered its evidence against herein respondents. However, the latter objected to the offer primarily on the ground that the documents violated the best evidence rule of the Rules of Court, as these documents were unauthenticated; moreover, petitioner had not provided any reason for its failure to present the originals.

On 11 March 2002, the Sandiganbayan issued a Resolution6 admitting the pieces of evidence while expressing some reservation, to wit:

WHEREFORE, taking note of the objections of accused Marcoses and the reply thereto by the plaintiff, all the documentary exhibits formally offered by the prosecution are hereby admitted in evidence; however, their evidentiary value shall be left to the determination of the Court.

SO ORDERED.

Imelda R. Marcos; Imee Marcos-Manotoc and Bongbong Marcos, Jr.; Irene Marcos-Araneta and Gregorio Ma. Araneta III; Yeung Chun Kam, Yeung Chun Ho and Yeung Chun Fan; and the PEA-PTGWO subsequently filed their respective Demurrers to Evidence.

On 6 December 2005, the Sandiganbayan issued the assailed Resolution,7 which granted all the Demurrers to Evidence except the one filed by Imelda R. Marcos. The dispositive portion reads:

WHEREFORE, premises considered, the Demurrer to Evidence filed by defendant Imelda R. Marcos is hereby DENIED. The Demurrer to Evidence filed by defendants Maria Imelda Marcos Manotoc, Ferdinand Marcos, Jr., Irene Marcos Araneta, Gregorio Maria Araneta III, Yeung Chun Kam, Yeung Chun Fan, Yeung Chun Ho, and intervenor PEA-PTGWO, are hereby GRANTED. The sequestration orders on the properties in the name of defendant Gregorio Maria Araneta III, are accordingly ordered lifted.

SO ORDERED.

The Sandiganbayan denied Imelda R. Marcos' Demurrer primarily because she had categorically admitted that she and her husband owned properties enumerated in the Complaint, while stating that these properties had been lawfully acquired. The court held that the evidence presented by petitioner constituted a prima facie case against her, considering that the value of the properties involved was grossly disproportionate to the Marcos spouses' lawful income. Thus, this admission and the fact that Imelda R. Marcos was the compulsory heir and administratrix of the Marcos estate were the primary reasons why the court held that she was responsible for accounting for the funds and properties alleged to be ill-gotten.

Secondly, the court pointed out that Rolando Gapud, whose deposition was taken in Hong Kong, referred to her as one directly involved in amassing ill-gotten wealth. The court also considered the compromise agreement between petitioner and Antonio O. Floirendo, who disclosed that he had performed several business transactions upon the instructions of the Marcos spouses.

With regard to the siblings Imee Marcos-Manotoc and Bongbong Marcos, Jr., the court noted that their involvement in the alleged illegal activities was never established. In fact, they were never mentioned by any of the witnesses presented. Neither did the documentary evidence pinpoint any specific involvement of the Marcos children.

Moreover, the court held that the evidence, in particular, exhibits "P,"8 "Q,"9 "R,"10 "S,"11 and "T,"12 were considered hearsay, because their originals were not presented in court, nor were they authenticated by the persons who executed them. Furthermore, the court pointed out that petitioner failed to provide any valid reason why it did not present the originals in court. These exhibits were supposed to show the interests of Imee Marcos-Manotok in the media networks IBC-13, BBC-2 and RPN-9, all three of which she had allegedly acquired illegally. These exhibits also sought to prove her alleged participation in dollar salting through De Soleil Apparel.

Finally, the court held that the relationship of respondents to the Marcos spouses was not enough reason to hold the former liable.

In the matter of the spouses Irene Marcos and Gregorio Araneta III, the court similarly held that there was no testimonial or documentary evidence that supported petitioner's allegations against the couple. Again, petitioner failed to present the original documents that supposedly supported the allegations against them. Instead, it merely presented photocopies of documents that sought to prove how the Marcoses used the Potencianos13 as dummies in acquiring and operating the bus company Pantranco.

Meanwhile, as far as the Yeungs were concerned, the court found the allegations against them baseless. Petitioner failed to demonstrate how their business, Glorious Sun Fashion Garments Manufacturing, Co. Phils. (Glorious Sun), was used as a vehicle for dollar salting; or to show that they themselves were dummies of the Marcoses. Again, the court held that the documentary evidence relevant to this allegation was inadmissible for being mere photocopies, and that the affiants had not been presented as witnesses.

Finally, the court also granted the Demurrer filed by PEA-PTGWO. While the court held that there was no evidence to show that Pantranco was illegally acquired, the former nevertheless held that there was a need to first determine the ownership of the disputed funds before they could be ordered released to the rightful owner.

On 20 December 2005, petitioner filed its Motion for Partial Reconsideration, insisting that there was a preponderance of evidence to show that respondents Marcos siblings and Gregorio Araneta III had connived with their parents in

acquiring ill-gotten wealth. It pointed out that respondents were compulsory heirs to the deposed President and were thus obliged to render an accounting and to return the ill-gotten wealth.

Moreover, petitioner asserted that the evidence established that the Yeungs were dummies of the Marcoses, and that the Pantranco assets were part of the Marcoses' alleged ill-gotten wealth.

Finally, petitioner questioned the court's ruling that the evidence previously admitted was later held to be inadmissible in evidence against respondents, thus, depriving the former of due process.

Inadvertently, petitioner was not able to serve a copy of the motion on respondents Imee Marcos-Manotoc and Bongbong Marcos, Jr. But upon realizing the oversight, it immediately did so and filed the corresponding Manifestation and Motion before the court. Nonetheless, this inadvertence prompted Imee Marcos-Manotoc and Bongbong Marcos, Jr. to file their Motion for Entry of Judgment.

On 2 March 2006, the court issued the second assailed Resolution,14 denying petitioner's Motion. The court pointed out its reservation in its Resolution dated 12 March 2002, wherein it said that it would still assess and weigh the evidentiary value of the admitted evidence. Furthermore, it said that even if it included the testimonies of petitioner's witnesses, these were not substantial to hold respondents liable. Thus, the court said:

WHEREFORE, there being no sufficient reason to set aside the resolution dated December 6, 2005, the plaintiff's Motion for Partial Reconsideration is hereby DENIED. The plaintiff's Motion and Manifestation dated January 18, 2006 is GRANTED in the interest of justice. The Motion for Entry of Judgment filed by defendants Imee Marcos and Bongbong Marcos is DENIED.

SO ORDERED.

Hence, this Petition.

Petitioner raises the same issues it raised in its Motion for Reconsideration filed before the Sandiganbayan, to wit:15

I. THE SANDIGANBAYAN ERRED IN GRANTING THE DEMURRER TO EVIDENCE FILED BY RESPONDENTS MA. IMELDA (IMEE) R. MARCOS AND FERDINAND (BONGBONG) R. MARCOS, JR., CONSIDERING THAT MORE THAN PREPONDERANT EVIDENCE ON RECORD CLEARLY DEMONSTRATES THEIR CONNIVANCE WITH FORMER PRESIDENT FERDINAND E. MARCOS AND OTHER MARCOS DUMMIES AND ABUSED THEIR POWER AND INFLUENCE IN UNLAWFULLY AMASSING FUNDS FROM THE NATIONAL TREASURY.

II. PETITION PROVED, BY MORE THAN PREPONDERANT EVIDENCE, THAT RESPONDENT-SPOUSES GREGORIO ARANETA III AND IRENE MARCOS ARANETA CONNIVED WITH FORMER PRESIDENT MARCOS IN UNLAWFULLY ACQUIRING BUSINESS INTERESTS WHICH ARE GROSSLY DISADVANTAGEOUS TO THE GOVERNMENT, AND IN A MANNER PROHIBITED UNDER THE CONSTITUTION AND ANTI-GRAFT STATUTES.

III. RESPONDENTS IMEE, BONGBONG, AND IRENE MARCOS ARE COMPULSORY HEIRS OF FORMER PRESIDENT MARCOS AND ARE EQUALLY OBLIGED TO RENDER AN ACCOUNTING AND RETURN THE ALLEGED ILL-GOTTEN WEALTH OF THE MARCOSES.

IV. THERE EXISTS CONCRETE EVIDENCE PROVING THAT RESPONDENTS YEUNG CHUN KAM, YEUNG CHUN FAN, AND YEUNG CHUN HO ACTED AS DUMMIES FOR THE MARCOSES, AND USED THE CORPORATION, GLORIOUS SUN, AS A CONDUIT IN AMASSING THE ILL-GOTTEN WEALTH. ACCORDINGLY, THE SANDIGANBAYAN ERRED IN GRANTING THEIR DEMURRER TO EVIDENCE.

V. THE DEMURRER TO EVIDENCE FILED BY INTERVENOR PEA-PTGWO WITH RESPECT TO THE PANTRANCO ASSETS SHOULD NOT HAVE BEEN GRANTED SINCE AMPLE EVIDENCE PROVES THAT THE SAID ASSETS INDUBITABLY FORM PART OF THE MARCOS ILL-GOTTEN WEALTH, AS BUTTRESSED BY THE FACT THAT NO JUDICIAL DETERMINATION HAS BEEN MADE AS TO WHOM THESE ASSETS RIGHTFULLY BELONG.

VI. THE SANDIGANBAYAN'S RULING WHICH REJECTED PEITITONER'S DOCUMENTARY EXHIBITS ALLEGEDLY FOR BEING "INADMISSIBLE" DIRECTLY CONTRADICTS ITS EARLIER RULING ADMITTING ALL SAID DOCUMENTARY EVIDENCE AND WAS RENDERED IN A MANNER THAT DEPRIVED PETITIONER'S RIGHT TO DUE PROCESS OF LAW.

There is some merit in petitioner's contention.

The Marcos Siblings and Gregorio Araneta III

Closely analyzing petitioner's Complaint and the present Petition for Review, it is clear that the Marcos siblings are

being sued in two capacities: first, as co-conspirators in the alleged accumulation of ill-gotten wealth; and second, as the compulsory heirs of their father, Ferdinand E. Marcos.16

With regard to the first allegation, as contained in paragraph 29 of its Third Amended Complaint quoted above, petitioner accused the Marcos siblings of having collaborated with, participated in, and/or benefitted from their parents' alleged accumulation of ill-gotten wealth. In particular, as far as Imee Marcos-Manotoc was concerned, she was accused of dollar salting by using Glorious Sun to import denim fabrics from one supplier at prices much higher than those paid by other users of similar materials. It was also alleged that the Marcoses personally benefitted from the sequestered media networks IBC-13, BBC-2, and RPN-9, in which Imee Marcos had a substantial interest.

Irene Marcos-Araneta, on the other hand, was accused of having conspired with her husband, respondent Gregorio Araneta III, in his being President Marcos' conduit to Pantranco, thereby paving the way for the President's ownership of the company in violation of Article VII, Section 4, paragraph 2 of the 1973 Constitution.17

To prove the general allegations against the Marcos siblings, petitioner primarily relied on the Sworn Statement18 and the Deposition19 of one of the financial advisors of President Marcos, Rolando C. Gapud, taken in Hong Kong on various dates.

Meanwhile, to prove the participation and interests of Imee Marcos-Manotoc in De Soleil Apparel and the media networks, petitioner relied on the Affidavits of Ramon S. Monzon,20 Yeung Kwok Ying,21 and Rodolfo V. Puno;22 and the transcript of stenographic notes (TSN) taken during the PCGG hearing held on 8 June 1987.23

As to spouses Irene Marcos-Araneta and Gregorio Araneta III, petitioner submitted the Articles of Incorporation of Northern Express Transport, Inc.;24  the Memorandum of Agreement25 and the Purchase Agreement26 between Pantranco and Batangas Laguna Tayabas Bus Company, Inc. (BLTBCo.); the Confidential Memorandum regarding the sale of the Pantranco assets;27 the Affidavit28 and the letter to the PCGG29 of Dolores A. Potenciano, owner of BLTBCo.; the Affidavit30 and the Memorandum31 of Eduardo Fajardo, who was then the Senior Vice-President of the Account Management Group of the Philippine National Bank (PNB), which was in turn the creditor for the Pantranco sale; and the Affidavit of Florencio P. Lucio, who was the Senior Account Specialist of the National Investment and Development Corporation.32

Petitioner contends that these documents fall under the Rule's third exception, that is, these documents are public records in the custody of a public officer or are recorded in a public office. It is its theory that since these documents were collected by the PCGG, then, necessarily, the conditions for the exception to apply had been met. Alternatively, it asserts that the "documents were offered to prove not only the truth of the recitals of the documents, but also of other external or collateral facts."33

The Court's Ruling 

Petitioner failed to observe the best evidence rule.

It is petitioner's burden to prove the allegations in its Complaint. For relief to be granted, the operative act on how and in what manner the Marcos siblings participated in and/or benefitted from the acts of the Marcos couple must be clearly shown through a preponderance of evidence. Should petitioner fail to discharge this burden, the Court is constrained and is left with no choice but to uphold the Demurrer to Evidence filed by respondents.

First, petitioner does not deny that what should be proved are the contents of the documents themselves. It is imperative, therefore, to submit the original documents that could prove petitioner's allegations.

Thus, the photocopied documents are in violation Rule 130, Sec. 3 of the Rules of Court, otherwise known as the best evidence rule, which mandates that the evidence must be the original document itself. The origin of the best evidence rule can be found and traced to as early as the 18th century in Omychund v. Barker,34 wherein the Court of Chancery said:

The judges and sages of the law have laid it down that there is but one general rule of evidence, the best that the nature of the case will admit.

The rule is, that if the writings have subscribing witnesses to them, they must be proved by those witnesses.

The first ground judges have gone upon in departing from strict rules, is an absolute strict necessity. Secondly, a presumed necessity. In the case of writings, subscribed by witnesses, if all are dead, the proof of one of their hands is sufficient to establish the deed: where an original is lost, a copy may be admitted; if no copy, then a proof by witnesses who have heard the deed, and yet it is a thing the law abhors to admit the memory of man for evidence.

Petitioner did not even attempt to provide a plausible reason why the originals were not presented, or any compelling

ground why the court should admit these documents as secondary evidence absent the testimony of the witnesses who had executed them.

In particular, it may not insist that the photocopies of the documents fall under Sec. 7 of Rule 130, which states:

Evidence admissible when original document is a public record. ? When the original of a document is in the custody of a public officer or is recorded in a public office, its contents may be proved be a certified copy issued by the public officer in custody thereof.

Secs. 19 and 20 of Rule 132 provide:

SECTION 19. Classes of documents. ? For the purpose of their presentation in evidence, documents are either public or private.

Public documents are:

(a) The written official acts, or records of the official acts of the sovereign authority, official bodies and tribunals, and public officers, whether of the Philippines, or of a foreign country;(b) Documents acknowledged before a notary public except last wills and testaments; and(c) Public records, kept in the Philippines, of private documents required by law to be entered therein.

All other writings are private.

SECTION 20. Proof of private document. -- Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or(b) By evidence of the genuineness of the signature or handwriting of the maker.Any other private document need only be identified as that which it is claimed to be.

The fact that these documents were collected by the PCGG in the course of its investigations does not make them per se public records referred to in the quoted rule.

Petitioner presented as witness its records officer, Maria Lourdes Magno, who testified that these public and private documents had been gathered by and taken into the custody of the PCGG in the course of the Commission's investigation of the alleged ill-gotten wealth of the Marcoses.  However, given the purposes for which these documents were submitted, Magno was not a credible witness who could testify as to their contents. To reiterate, "[i]f the writings have subscribing witnesses to them, they must be proved by those witnesses." Witnesses can testify only to those facts which are of their personal knowledge; that is, those derived from their own perception.35 Thus, Magno could only testify as to how she obtained custody of these documents, but not as to the contents of the documents themselves.

Neither did petitioner present as witnesses the affiants of these Affidavits or Memoranda submitted to the court. Basic is the rule that, while affidavits may be considered as public documents if they are acknowledged before a notary public, these Affidavits are still classified as hearsay evidence. The reason for this rule is that they are not generally prepared by the affiant, but by another one who uses his or her own language in writing the affiant's statements, parts of which may thus be either omitted or misunderstood by the one writing them. Moreover, the adverse party is deprived of the opportunity to cross-examine the affiants. For this reason, affidavits are generally rejected for being hearsay, unless the affiants themselves are placed on the witness stand to testify thereon.36

As to the copy of the TSN of the proceedings before the PCGG, while it may be considered as a public document since it was taken in the course of the PCGG's exercise of its mandate, it was not attested to by the legal custodian to be a correct copy of the original. This omission falls short of the requirement of Rule 132, Secs. 24 and 25 of the Rules of Court.37

In summary, we adopt the ruling of the Sandiganbayan, to wit:

Further, again contrary to the theory of the plaintiff, the presentation of the originals of the aforesaid exhibits is not validly excepted under Rule 130, Section 3 (a), (b), and (d) of the Rules of Court. Under paragraph (d), when 'the original document is a public record in the custody of a public officer or is recorded in a public office,' presentation of the original thereof is excepted. However, as earlier observed, all except one of the exhibits introduced by the plaintiff were not necessarily public documents. The transcript of stenographic notes (TSN) of the proceedings purportedly before the PCGG, the plaintiff's exhibit "Q", may be a public document, but what was presented by the plaintiff was a mere photocopy of the purported TSN. The Rules provide that when the original document is in the custody of a public officer or is recorded in a public office, its contents may be proved by a certified copy issued by the public officer in custody thereof. Exhibit "Q" was not a certified copy and it was not even signed by the stenographer who supposedly

took down the proceedings.

The rest of the above-mentioned exhibits cannot likewise be excepted under paragraphs (a) and (b) of Section 3. Section 5 of the same Rule provides that 'when the original documents has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.' Thus, in order that secondary evidence may be admissible, there must be proof by satisfactory evidence of (1) due execution of the original; (2) loss, destruction or unavailability of all such originals and (3) reasonable diligence and good faith in the search for or attempt to produce the original. None of these requirements were complied with by the plaintiff. Similar to exhibit 'Q', exhibits 'P', 'R', 'S', and 'T' were all photocopies. 'P', 'R', and 'T' were affidavits of persons who did not testify before the Court. Exhibit 'S' is a letter which is clearly a private document. Not only does it not fall within the exceptions of Section 3, it is also a mere photocopy. As We previously emphasized, even if originals of these affidavits were presented, they would still be considered hearsay evidence if the affiants do not testify and identify them.38

Thus, absent any convincing evidence to hold otherwise, it follows that petitioner failed to prove that the Marcos siblings and Gregorio Araneta III collaborated with former President Marcos and Imelda R. Marcos and participated in the first couple's alleged accumulation of ill-gotten wealth insofar as the specific allegations herein were concerned.

The Marcos siblings are compulsory heirs.

To reiterate, in its third Amended Complaint, petitioner prays that the Marcos respondents be made to (1) pay for the value of the alleged ill-gotten wealth with interest from the date of acquisition; (2) render a complete accounting and inventory of all funds and other pieces of property legally or beneficially held and/or controlled by them, as well as their legal and beneficial interest therein; (3) pay actual damages estimated at P200 billion and additional actual damages to reimburse expenses for the recovery of the alleged ill-gotten wealth estimated at P250 million or in such amount as may be proven during trial; (4) pay moral damages amounting to P50 billion; (5) pay temperate and nominal damages, as well as attorney's fees and litigation expenses in an amount to be proven during the trial; (6) pay exemplary damages in the amount of P1 billion; and (7) pay treble judicial costs.39

It must be stressed that we are faced with exceptional circumstances, given the nature and the extent of the properties involved in the case pending with the Sandiganbayan. It bears emphasis that the Complaint is one for the reversion, the reconveyance, the restitution and the accounting of alleged ill-gotten wealth and the payment of damages. Based on the allegations of the Complaint, the court is charged with the task of (1) determining the properties in the Marcos estate that constitute the alleged ill-gotten wealth; (2) tracing where these properties are; (3) issuing the appropriate orders for the accounting, the recovery, and the payment of these properties; and, finally, (4) determining if the award of damages is proper.

Since the pending case before the Sandiganbayan survives the death of Ferdinand E. Marcos, it is imperative therefore that the estate be duly represented. The purpose behind this rule is the protection of the right to due process of every party to a litigation who may be affected by the intervening death. The deceased litigant is himself protected, as he continues to be properly represented in the suit through the duly appointed legal representative of his estate.40 On that note, we take judicial notice of the probate proceedings regarding the will of Ferdinand E. Marcos. In Republic of the Philippines v. Marcos II,41 we upheld the grant by the Regional Trial Court (RTC) of letters testamentary in solidum to Ferdinand R. Marcos, Jr. and Imelda Romualdez-Marcos as executors of the last will and testament of the late Ferdinand E. Marcos.

Unless the executors of the Marcos estate or the heirs are ready to waive in favor of the state their right to defend or protect the estate or those properties found to be ill-gotten in their possession, control or ownership, then they may not be dropped as defendants in the civil case pending before the Sandiganbayan.

Rule 3, Sec. 7 of the Rules of Court defines indispensable parties as those parties-in-interest without whom there can be no final determination of an action. They are those parties who possess such an interest in the controversy that a final decree would necessarily affect their rights, so that the courts cannot proceed without their presence. Parties are indispensable if their interest in the subject matter of the suit and in the relief sought is inextricably intertwined with that of the other parties.42

In order to reach a final determination of the matters concerning the estate of Ferdinand E. Marcos - that is, the accounting and the recovery of ill-gotten wealth - the present case must be maintained against Imelda Marcos and herein respondent Ferdinand "Bongbong" R. Marcos, Jr., as executors of the Marcos estate pursuant to Sec. 1 of Rule 87 of the Rules of Court. According to this provision, actions may be commenced to recover from the estate, real or personal property, or an interest therein, or to enforce a lien thereon; and actions to recover damages for an injury to person or property, real or personal, may be commenced against the executors.

We also hold that the action must likewise be maintained against Imee Marcos-Manotoc and Irene Marcos-Araneta on the basis of the non-exhaustive list attached as Annex "A" to the Third Amended Complaint, which states that the

listed properties therein were owned by Ferdinand and Imelda Marcos and their immediate family.43 It is only during the trial of Civil Case No. 0002 before the Sandiganbayan that there could be a determination of whether these properties are indeed ill-gotten or were legitimately acquired by respondents and their predecessors. Thus, while it was not proven that respondents conspired in accumulating ill-gotten wealth, they may be in possession, ownership or control of such ill-gotten properties or the proceeds thereof as heirs of the Marcos couple. Thus, their lack of participation in any illegal act does not remove the character of the property as ill-gotten and, therefore, as rightfully belonging to the State.

Secondly, under the rules of succession, the heirs instantaneously became co-owners of the Marcos properties upon the death of the President. The property rights and obligations to the extent of the value of the inheritance of a person are transmitted to another through the decedent's death.44 In this concept, nothing prevents the heirs from exercising their right to transfer or dispose of the properties that constitute their legitimes, even absent their declaration or absent the partition or the distribution of the estate.  In Jakosalem v. Rafols,45 we said:

Article 440 of the Civil Code provides that "the possession of hereditary property is deemed to be transmitted to the heir without interruption from the instant of the death of the decedent, in case the inheritance be accepted." And Manresa with reason states that upon the death of a person, each of his heirs "becomes the undivided owner of the whole estate left with respect to the part or portion which might be adjudicated to him, a community of ownership being thus formed among the coowners of the estate while it remains undivided." (3 Manresa, 357; Alcala vs. Alcala, 35 Phil. 679.) And according to article 399 of the Civil Code, every part owner may assign or mortgage his part in the common property, and the effect of such assignment or mortgage shall be limited to the portion which may be allotted him in the partition upon the dissolution of the community. Hence, in the case of Ramirez vs. Bautista, 14 Phil. 528, where some of the heirs, without the concurrence of the others, sold a property left by their deceased father, this Court, speaking thru its then Chief Justice Cayetano Arellano, said that the sale was valid, but that the effect thereof was limited to the share which may be allotted to the vendors upon the partition of the estate. (Emphasis supplied)

Lastly, petitioner's prayer in its Third Amended Complaint directly refers to herein respondents, to wit:

1. AS TO THE FIRST SECOND AND THIRD CAUSES OF ACTION - To return and reconvey to Plaintiff all funds and other property acquired by Defendants during their incumbency as public officers, which funds and other property are manifestly out of proportion to their salaries, other lawful income and income from legitimately acquired property which Defendants have failed to establish as having been, in fact, lawfully acquired by them, alternatively, to solidarily pay Plaintiff the value thereof with interest thereon from the date of acquisition until full payment.

2. AS TO THE FOURTH CAUSE OF ACTION - to individually render to this Honorable Court a complete accounting and inventory, subject to evaluation of Court-appointed assessors, of all funds and other property legally or beneficially held and/or controlled by them, as well as their legal and beneficial interest in such funds and other property. (Emphasis supplied)

In sum, the Marcos siblings are maintained as respondents, because (1) the action pending before the Sandiganbayan is one that survives death, and, therefore, the rights to the estate must be duly protected; (2) they allegedly control, possess or own ill-gotten wealth, though their direct involvement in accumulating or acquiring such wealth may not have been proven.

Yeung Chun Kam, Yeung Chun Ho And Yeung Chun Fan

It is worthy to note that respondents draw our attention to American Inter-Fashion Corporation v. Office of the President46 in which they contend that this Court considered the allegation of dollar salting as baseless. The cited case, however, finds no application herein as the former merely ruled that Glorious Sun was denied due process when it was not furnished by the Garments and Textile Export Board (GTEB) any basis for the cancellation of the export quota because of allegations of dollar salting.  That Decision did not prevent petitioner from adducing evidence to support its allegation in Civil Case No. 0002 before the Sandiganbayan under a different cause of action.

Nevertheless, the allegations against Yeung Chun Kam, Yeung Chun Ho and Yeung Chun Fan in the case at bar were also proved to be baseless. Again, petitioner failed to illustrate how respondents herein acted as dummies of the Marcoses in acquiring ill-gotten wealth. This Court notes that the Complaint against the Yeungs alleges that the Marcoses used Glorious Sun - the garment company in which the Yeungs are controlling stockholders - for illegal dollar salting through the company's importation of denim fabrics from only one supplier at prices much higher than those being paid by other users of similar materials. Notably, no mention of De Soleil Apparel was made.

To prove its allegations, petitioner submitted the controverted Exhibits "P," "Q," "R," "S," and "T." As earlier discussed in detail, these pieces of evidence were mere photocopies of the originals and were unauthenticated by the persons who executed them; thus, they have no probative value. Even the allegations of petitioner itself in its Petition for

Review are bereft of any factual basis for holding that these documents undoubtedly show respondents' participation in the alleged dollar salting. The pertinent portion of the Petition reads:

To illustrate, the Affidavit dated May 29, 1987 executed by Mr. Ramon Monzon which was submitted as Exhibit P, showed that respondent Imee Marcos-Manotoc owns and controls IBC-13, BBC-2 and (R)PN-9, and has interest in the De Soleil Apparel. The testimony of Mr. Ramon Monzon during the hearing on June 8, 1987 before the Presidential Commission on Good Government as shown in the Transcript of Stenographic Notes also affirmed his declarations in the Affidavit dated May 29, 1987. The Transcript of Stenographic Notes dated June 8, 1987 was presented as Exhibit Q. Moreover, the Affidavit dated March 21, 1986 of Yeung Kwok Ying which was presented as Exhibit R disclosed that Imee Marcos-Manotoc is the owner of 67% equity of De Soleil Apparel. The letter dated July 17, 1984 signed by seven (7) incorporators of De Soleil Apparel, addressed to Hongkong investors which was presented as Exhibit S confirmed that the signatories hold or own 67% equity of the corporation in behalf of the beneficial owners previously disclosed to the addressees. In addition to the foregoing documents, petitioner presented the Affidavit of Rodolfo V. Puno, Chairman of the Garments and Textile Export Group (GTEB) as Exhibit T wherein he categorically declared that the majority of De Soleil Apparel was actually owned by respondent Imee Marcos-Manotoc.47

The foregoing quotation from the Petition is bereft of any factual matter that warrants a consideration by the Court. Straight from the horse's mouth, these documents are only meant to show the ownership and interest of Imee Marcos Manotoc in De Soleil - and not how respondent supposedly participated in dollar salting or in the accumulation of ill-gotten wealth.

PEA-PTGWO

The PEA-PTGWO Demurrer to Evidence was granted primarily as a consequence of the prosecution's failure to establish that the assets of Pantranco were ill-gotten, as discussed earlier. Thus, we find no error in the assailed Order of the Sandiganbayan.

A Final Note 

As earlier adverted to, the best evidence rule has been recognized as an evidentiary standard since the 18 th century.  For three centuries, it has been practiced as one of the most basic rules in law.  It is difficult to conceive that one could have finished law school and passed the bar examinations without knowing such elementary rule. Thus, it is deeply disturbing that the PCGG and the Office of the Solicitor General (OSG) - the very agencies sworn to protect the interest of the state and its people - could conduct their prosecution in the manner that they did. To emphasize, the PCGG is a highly specialized office focused on the recovery of ill-gotten wealth, while the OSG is the principal legal defender of the government. The lawyers of these government agencies are expected to be the best in the legal profession.

However, despite having the expansive resources of government, the members of the prosecution did not even bother to provide any reason whatsoever for their failure to present the original documents or the witnesses to support the government's claims. Even worse was presenting in evidence a photocopy of the TSN of the PCGG proceedings instead of the original, or a certified true copy of the original, which the prosecutors themselves should have had in their custody. Such manner of legal practice deserves the reproof of this Court. We are constrained to call attention to this apparently serious failure to follow a most basic rule in law, given the special circumstances surrounding this case.

The public prosecutors should employ and use all government resources and powers efficiently, effectively, honestly and economically, particularly to avoid wastage of public funds and revenues. They should perform and discharge their duties with the highest degree of excellence, professionalism, intelligence and skill.48

The basic ideal of the legal profession is to render service and secure justice for those seeking its aid.49 In order to do this, lawyers are required to observe and adhere to the highest ethical and professional standards. The legal profession is so imbued with public interest that its practitioners are accountable not only to their clients, but to the public as well.

The public prosecutors, aside from being representatives of the government and the state, are, first and foremost, officers of the court. They took the oath to exert every effort and to consider it their duty to assist in the speedy and efficient administration of justice.50  Lawyers owe fidelity to the cause of the client and should be mindful of the trust and confidence reposed in them.51 Hence, should serve with competence and diligence.52

We note that there are instances when this Court may overturn the dismissal of the lower courts in instances when it is shown that the prosecution has deprived the parties their due process of law. In Merciales v. Court of Appeals,53 we reversed the Decision of the RTC in dismissing the criminal case for rape with homicide. In that case, it was very apparent that the public prosecutor violated the due process rights of the private complainant owing to its blatant disregard of procedural rules and the failure to present available crucial evidence, which would tend to prove the guilt

or innocence of the accused therein. Moreover, we likewise found that the trial court was gravely remiss in its duty to ferret out the truth and, instead, just "passively watched as the public prosecutor bungled the case."

However, it must be emphasized that Merciales was filed exactly to determine whether the prosecution and the trial court gravely abused their discretion in the proceedings of the case, thus resulting in the denial of the offended party's due process. Meanwhile, the present case merely alleges that there was an error in the Sandiganbayan's consideration of the probative value of evidence. We also note that in Merciales, both the prosecution and the trial court were found to be equally guilty of serious nonfeasance, which prompted us to remand the case to the trial court for further proceedings and reception of evidence. Merciales is thus inapplicable to the case at bar.

Nevertheless, given the particular context of this case, the failure of the prosecution to adhere to something as basic as the best evidence rule raises serious doubts on the level and quality of effort given to the government's cause.  Thus, we highly encourage the Office of the President, the OSG, and the PCGG to conduct the appropriate investigation and consequent action on this matter.cralaw

WHEREFORE, in view of the foregoing, the Petition is PARTIALLYGRANTED. The assailed Sandiganbayan Resolution dated 6 December 2005 isAFFIRMED with MODIFICATION. For the reasons stated herein, respondents Imelda Marcos-Manotoc, Irene Marcos-Araneta, and Ferdinand R. Marcos, Jr. shall be maintained as defendants in Civil Case No. 0002 pending before the Sandiganbayan.

Let a copy of this Decision be furnished to the Office of the President so that it may look into the circumstances of this case and determine the liability, if any, of the lawyers of the Office of the Solicitor General and the Presidential Commission on Good Government in the manner by which this case was handled in the Sandiganbayan.

SO ORDERED.

Brion,* (Acting Chairperson), Villarama, Jr.,** Perez, and  Reyes, JJ., concur.

Endnotes:4 Presidential Decree No. 1883, Sec. 2 defines "salting of foreign exchange" as when any person engaged in the business of exporting underdeclares or undervalues his exports, either as to price or quantity, or any person engaged in the business of importation overvalues or overdeclares his importations, either as to price or quantity, for the purpose of salting and retaining foreign exchange abroad in violation of existing laws and Central Bank rules and regulations.

11 Letter of Paulino Petralba to Yeung Chun Kam, Yeung Chun Ho, and Arcie Chan.

13 Max B. Potenciano, Max Joseph A. Potenciano, and Dolores A. Potenciano were owners of Batangas Laguna Tayabas Bus Company (BLTBCo.).  In line with the government's privatization program, the assets of Pantranco were sold to the BLTBCo. in 1985. The Potencianos thereafter incorporated Pantranco as a private corporation.

16 Attached as Annex "A" to the Complaint is a list of assets and other properties purported to be owned by Ferdinand E. Marcos, Imelda R. Marcos, and their immediate family.

17 (2) The President and the Vice-President shall not, during their tenure, hold any other office, except when otherwise provided in this Constitution, nor may they practice any profession, participate directly or indirectly in any business, or be financially interested directly or indirectly in any contract with, or in any franchise or special privilege granted by the Government or any subdivision, agency, or instrumentality thereof, including government-owned or controlled corporation.

35Rules of Court, Rule 130, Sec. 36.

37 SECTION 24. Proof of official record. -- The record of public documents referred to in paragraph (a) of Section 19, when admissible for any purpose, may be evidenced by an official publication thereof or by a copy attested by the officer having the legal custody of the record, or by his deputy, and accompanied, if the record is not kept in the Philippines, with a certificate that such officer has the custody. If the office in which the record is kept is in a foreign country, the certificate may be made by a secretary of the embassy or legation, consul general, consul, vice consul, or consular agent or by any officer in the foreign service of the Philippines stationed in the foreign country in which the record is kept, and authenticated by the seal of his office.

SECTION 25. What attestation of copy must state. -- Whenever a copy of a document or record is attested for the purpose of evidence, the attestation must state, in substance, that the copy is a correct copy of the original, or a specific part thereof, as the case may be. The attestation must be under the official seal of the attesting officer, if there be any, or if he be the clerk of a court having a seal, under the seal of such court.

44 Civil Code, Art. 774.

48 R.A. 6713, Code of Conduct and Ethical Standards for Public Officials and Employees, Sec. 4(a) and (b).50 Code of Professional Responsibility, Canon 12.51 Id., Canon 17.52 Id., Canon 18.

112 [G.R. NO. 170491 : April 4, 2007]

NATIONAL POWER CORPORATION, Petitioner, v. HON. RAMON G. CODILLA, JR., Presiding Judge, RTC of Cebu, Br. 19, BANGPAI SHIPPING COMPANY, and WALLEM SHIPPING, INCORPORATED, Respondents.

D E C I S I O N

Before Us is a Petition for Review on Certiorari under Rule 45 of the Rules of Civil Procedure, assailing the Decision1 of the Court of Appeals in CA-G.R. CEB-SP No. 00848, dated 9 November 2005, which dismissed the Petition for Certiorari filed by the National Power Corporation seeking to set aside the Order2 issued by the Regional Trial Court (RTC) of Cebu, Branch 19 dated 16 November 2004, denying admission and excluding from the records plaintiff's (herein petitioner) Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J", and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R" and "S" and its sub-markings.

On 20 April 1996, M/V Dibena Win, a vessel of foreign registry owned and operated by private respondent Bangpai Shipping, Co., allegedly bumped and damaged petitioner's Power Barge 209 which was then moored at the Cebu International Port. Thus, on 26 April 1996, petitioner filed before the Cebu RTC a complaint for damages against private respondent Bangpai Shipping Co., for the alleged damages caused on petitioner's power barges.

Thereafter, petitioner filed an Amended Complaint dated 8 July 1996 impleading herein private respondent Wallem Shipping, Inc., as additional defendant, contending that the latter is a ship agent of Bangpai Shipping Co. On 18 September 1996, Wallem Shipping, Inc. filed a Motion to Dismiss which was subsequently denied by public respondent Judge in an Order dated 20 October 1998. Bangpai Shipping Co. likewise filed a Motion to Dismiss which was also denied by public respondent Judge in an Order issued on 24 January 2003.

Petitioner, after adducing evidence during the trial of the case, filed a formal offer of evidence before the lower court on 2 February 2004 consisting of Exhibits "A" to "V" together with the sub-marked portions thereof. Consequently, private respondents Bangpai Shipping Co. and Wallem Shipping, Inc. filed their respective objections to petitioner's formal offer of evidence.

On 16 November 2004, public respondent judge issued the assailed order denying the admission and excluding from the records petitioner's Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R" and "S" and its sub-markings. According to the court a quo:

The Court finds merit in the objections raised and the motion to strike out filed respectively by the defendants. The record shows that the plaintiff has been given every opportunity to present the originals of the Xerox or photocopies of the documents it offered. It never produced the originals. The plaintiff attempted to justify the admission of the photocopies by contending that "the photocopies offered are equivalent to the original of the document" on the basis of the Electronic Evidence (Comment to Defendant Wallem Philippines' Objections and Motion to Strike). But as rightly pointed out in defendant Wallem's Reply to the Comment of Plaintiff, the Xerox copies do not constitute the electronic evidence defined in Section 1 of Rule 2 of the Rules on Electronic Evidence as follows:

"(h) "Electronic document" refers to information or the representation of information, data, figures, symbols or other models of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and any printout, readable by sight or other means which accurately reflects the electronic data message or electronic document. For the purpose of these Rules, the term "electronic document" may be used interchangeably with "electronic data message".

The information in those Xerox or photocopies was not received, recorded, retrieved or produced electronically. Moreover, such electronic evidence must be authenticated (Sections 1 and 2, Rule 5, Rules on Electronic Evidence), which the plaintiff failed to do. Finally, the required Affidavit to prove the admissibility and evidentiary weight of the alleged electronic evidence (Sec. 1, Rule 9, Ibid) was not executed, much less presented in evidence.

The Xerox or photocopies offered should, therefore, be stricken off the record. Aside from their being not properly identified by any competent witness, the loss of the principals thereof was not established by any competent proof.

x    x    x

WHEREFORE, plaintiff's Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J", and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, and "R" are hereby DENIED admission and excluded from the records. However, these excluded evidence should be attached to the records of this case to enable the appellate court to pass upon them should an appeal be taken from the decision on the merits to be rendered upon the termination of the trial of this case.

Exhibits "S" and its sub-markings are also DENIED admission for lack of proper identification since the witness who brought these pictures expressly admitted that he was not present when the photos were taken and had not knowledge when the same where taken.3

Upon denial of petitioner's Motion for Reconsideration in an Order dated 20 April 2005, petitioner filed a Petition for Certiorari under Rule 65 of the Rules of Civil Procedure before the Court of Appeals maintaining that public respondent Judge acted with grave abuse of discretion amounting to lack or excess of jurisdiction in denying the admission of its Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, "R", and "S" and its sub-markings.

On 9 November 2005, the appellate court issued a Decision dismissing petitioner's petition for certiorari, the pertinent portions of which elucidate:

After a judicious scrutiny of the record of the case on hand, together with the rules and jurisprudence which are applicable in the premises, we have come up with a finding that the petition for certiorari filed in this case is not meritorious.

It appears that there is no sufficient showing by the petitioner that the respondent judge acted with grave abuse of discretion in issuing the assailed orders in Civil Case No. CEB-18662. As what our jurisprudence tells us, grave abuse of discretion is meant such capricious and whimsical exercise of judgment as would be equivalent to lack of jurisdiction x x x.

In the case at bench, what has been shown to the contrary by the totality of the record on hand is that the respondent judge acted correctly and within the pale of his sound discretion in issuing the assailed order, dated November 16, 2004, in Civil Case No. CEB-18662.

Indeed, it appears that the pieces of petitioner's documentary evidence which were denied admission by the respondent judge were not properly identified by any competent witness. As pointed out by the respondent Bangpai Shipping Company in its comment on the petition filed in this case which reproduces some excerpts of the testimonies in the court a quo of Atty. Marianito De Los Santos, Engr. Nestor Enriquez, Jr. and Mr. Rodulfo I. Pagaling, the said witnesses did not have personal knowledge of and participation in the preparation and making of the pieces of documentary evidence denied admission by respondent judge x x x. In other words, there was lack of proper identification of said pieces of documentary evidence. x x x.

Then another ground for denying admission of petitioner's Exhibits A, C, D, E, H, I, J, K, L, M, N, O, P, Q, R, and S by the respondent judge is that said pieces of documentary evidence were merely photocopies of purported documents or papers. There is no gainsaying the fact that the respondent judge acted within the pale of his discretion when he denied admission of said documentary evidence. Section 3 of Rule 130 of the Rules of Court of the Philippines is very explicit in providing that, when the subject of inquiry are the contents of documents, no evidence shall be admissible other than the original documents themselves, except in certain cases specifically so enumerated therein, and the petitioner has not shown that the non-presentation or non-production of its original documentary pieces of evidence falls under such exceptions. As aptly pointed out by the respondent judge in the order issued by him on November 16, 2004:

"x x x The record shows that the plaintiff (petitioner herein) has been given every opportunity to present the originals of the Xerox or photocopies of the documents it offered. It never produced said originals."

So, the petitioner has only itself to blame for the respondent judge's denial of admission of its aforementioned documentary evidence.

Of course, the petitioner tries to contend that the photocopies of documents offered by it are equivalent to the original documents that it sought to offer in evidence, based on the Rules on Electronic Evidence which were in force and

effect since August 1, 2001. However, such a contention is devoid of merit. The pieces of documentary evidence offered by the petitioner in Civil Case CEB-18662 which were denied admission by the respondent judge do not actually constitute as electronic evidence as defined in the Rules on Electronic Evidence. The informations therein were not received, retrieved or produced electronically. The petitioner has not adequately established that its documentary evidence were electronic evidence. it has not properly authenticated such evidence as electronic documents, assuming arguendo that they are. Lastly, the petitioner has not properly established by affidavit pursuant to Rule 9 of the Rules on Electronic Evidence the admissibility and evidentiary weight of said documentary evidence.

Thus, by any legal yardstick, it is manifest that the respondent judge did not commit grave abuse of discretion in denying admission of the aforementioned documentary evidence of petitioner.

But even if it be granted just for the sake of argument that the respondent judge committed an error in denying the aforementioned documentary evidence of the petitioner, still the petition for certiorari filed in this case must fail. Such error would at most be only an error of law and not an error of jurisdiction. In Lee v. People, 393 SCRA 397, the Supreme Court of the Philippines said that certiorari will not lie in case of an error of law. x x x.

WHEREFORE, in view of the foregoing premises, judgment is hereby rendered by us DISMISSING the petition filed in this case and AFFIRMING the assailed orders issued by respondent judge in Civil Case No. CEB-18662.4

Aggrieved by the aforequoted decision, petitioner filed the instant petition.

The focal point of this entire controversy is petitioner's obstinate contention that the photocopies it offered as formal evidence before the trial court are the functional equivalent of their original based on its inimitable interpretation of the Rules on Electronic Evidence.

Petitioner insists that, contrary to the rulings of both the trial court and the appellate court, the photocopies it presented as documentary evidence actually constitute electronic evidence based on its own premise that an "electronic document" as defined under Section 1(h), Rule 2 of the Rules on Electronic Evidence is not limited to information that is received, recorded, retrieved or produced electronically. Rather, petitioner maintains that an "electronic document" can also refer to other modes of written expression that is produced electronically, such as photocopies, as included in the section's catch-all proviso: "any print-out or output, readable by sight or other means".

We do not agree.

In order to shed light to the issue of whether or not the photocopies are indeed electronic documents as contemplated in Republic Act No. 8792 or the Implementing Rules and Regulations of the Electronic Commerce Act, as well as the Rules on Electronic Evidence, we shall enumerate the following documents offered as evidence by the petitioner, to wit:

1. Exhibit "A" is a photocopy of a letter manually signed by a certain Jose C. Troyo, with "RECEIVED" stamped thereon, together with a handwritten date;

2. Exhibit "C" is a photocopy of a list of estimated cost of damages of petitioner's power barges 207 and 209 prepared by Hopewell Mobile Power Systems Corporation and manually signed by Messrs. Rex Malaluan and Virgilio Asprer;

3. Exhibit "D" is a photocopy of a letter manually signed by a certain Nestor G. Enriquez, Jr., with "RECEIVED" stamped thereon, together with a handwritten notation of the date it was received;

4. Exhibit "E" is a photocopy of a Standard Marine Protest Form which was filled up and accomplished by Rex Joel C. Malaluan in his own handwriting and signed by him. Portions of the Jurat were handwritten, and manually signed by the Notary Public;

5. Exhibit "H" is a photocopy of a letter manually signed by Mr. Nestor G. Enriquez, Jr. with "RECEIVED" stamped thereon, together with a handwritten notation of the date it was received;

6. Exhibit "I" is a photocopy of a computation of the estimated energy loss allegedly suffered by petitioner which was manually signed by Mr. Nestor G. Enriquez, Jr.;

7. Exhibit "J" is a photocopy of a letter containing the breakdown of the cost estimate, manually signed by Mr. Nestor G. Enriquez, Jr., with "RECEIVED" stamped thereon, together with a handwritten notation of the date it was received, and other handwritten notations;

8. Exhibit "K" is a photocopy of the Subpoena Duces Tecum Ad Testificandum written using a manual typewriter, signed manually by Atty. Ofelia Polo-De Los Reyes, with a handwritten notation when it was received by the party;

9. Exhibit "L" is a photocopy of a portion of the electricity supply and operation and maintenance agreement between petitioner and Hopewell, containing handwritten notations and every page containing three unidentified manually placed signatures;

10. Exhibit "M" is a photocopy of the Notice of Termination with attachments addressed to Rex Joel C. Malaluan, manually signed by Jaime S. Patinio, with a handwritten notation of the date it was received. The sub-markings also contain manual signatures and/or handwritten notations;

11. Exhibit "N" is a photocopy of a letter of termination with attachments addressed to VIrgilio Asprer and manually signed by Jaime S. Patino. The sub-markings contain manual signatures and/or handwritten notations;

12. Exhibit "O" is the same photocopied document marked as Annex C;

13. Exhibit "P" is a photocopy of an incident report manually signed by Messrs. Malaluan and Bautista and by the Notary Public, with other handwritten notations;

14. Exhibit "Q" is a photocopy of a letter manually signed by Virgilio Asprer and by a Notary Public, together with other handwritten notations.

On the other hand, an "electronic document" refers to information or the representation of information, data, figures, symbols or other models of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically.5 It includes digitally signed documents and any printout, readable by sight or other means which accurately reflects the electronic data message or electronic document.6

The rules use the word "information" to define an electronic document received, recorded, transmitted, stored, processed, retrieved or produced electronically. This would suggest that an electronic document is relevant only in terms of the information contained therein, similar to any other document which is presented in evidence as proof of its contents.7 However, what differentiates an electronic document from a paper-based document is the manner by which the information is processed; clearly, the information contained in an electronic document is received, recorded, transmitted, stored, processed, retrieved or produced electronically.

A perusal of the information contained in the photocopies submitted by petitioner will reveal that not all of the contents therein, such as the signatures of the persons who purportedly signed the documents, may be recorded or produced electronically. By no stretch of the imagination can a person's signature affixed manually be considered as information electronically received, recorded, transmitted, stored, processed, retrieved or produced. Hence, the argument of petitioner that since these paper printouts were produced through an electronic process, then these photocopies are electronic documents as defined in the Rules on Electronic Evidence is obviously an erroneous, if not preposterous, interpretation of the law. Having thus declared that the offered photocopies are not tantamount to electronic documents, it is consequential that the same may not be considered as the functional equivalent of their original as decreed in the law.

Furthermore, no error can be ascribed to the court a quo in denying admission and excluding from the records petitioner's Exhibits "A", "C", "D", "E", "H" and its sub-markings, "I", "J" and its sub-markings, "K", "L", "M" and its sub-markings, "N" and its sub-markings, "O", "P" and its sub-markings, "Q" and its sub-markings, and "R". The trial court was correct in rejecting these photocopies as they violate the best evidence rule and are therefore of no probative value being incompetent pieces of evidence. Before the onset of liberal rules of discovery, and modern technique of electronic copying, the best evidence rule was designed to guard against incomplete or fraudulent proof and the introduction of altered copies and the withholding of the originals.8 But the modern justification for the rule has expanded from the prevention of fraud to a recognition that writings occupy a central position in the law.9 The importance of the precise terms of writings in the world of legal relations, the fallibility of the human memory as reliable evidence of the terms, and the hazards of inaccurate or incomplete duplicate are the concerns addressed by the best evidence rule.10

Moreover, as mandated under Section 2, Rule 130 of the Rules of Court:

"SECTION 2. Original writing must be produced; exceptions. - There can be no evidence of a writing the contents of which is the subject of inquiry, other than the original writing itself, except in the following cases:

(a) When the original has been lost, destroyed, or cannot be produced in court;

(b) When the original is in the possession of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original is a record or other document in the custody of a public officer;

(d) When the original has been recorded in an existing record a certified copy of which is made evidence by law;

(e) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole."

When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.11 The offeror of secondary evidence is burdened to prove the predicates thereof: (a) the loss or destruction of the original without bad faith on the part of the proponent/offeror which can be shown by circumstantial evidence of routine practices of destruction of documents;12 (b) the proponent must prove by a fair preponderance of evidence as to raise a reasonable inference of the loss or destruction of the original copy; and (c) it must be shown that a diligent and bona fide but unsuccessful search has been made for the document in the proper place or places.13 However, in the case at bar, though petitioner insisted in offering the photocopies as documentary evidence, it failed to establish that such offer was made in accordance with the exceptions as enumerated under the abovequoted rule. Accordingly, we find no error in the Order of the court a quo denying admissibility of the photocopies offered by petitioner as documentary evidence.

Finally, it perplexes this Court why petitioner continued to obdurately disregard the opportunities given by the trial court for it to present the originals of the photocopies it presented yet comes before us now praying that it be allowed to present the originals of the exhibits that were denied admission or in case the same are lost, to lay the predicate for the admission of secondary evidence. Had petitioner presented the originals of the documents to the court instead of the photocopies it obstinately offered as evidence, or at the very least laid the predicate for the admission of said photocopies, this controversy would not have unnecessarily been brought before the appellate court and finally to this Court for adjudication. Had it not been for petitioner's intransigence, the merits of petitioner's complaint for damages would have been decided upon by the trial court long ago. As aptly articulated by the Court of Appeals, petitioner has only itself to blame for the respondent judge's denial of admission of its aforementioned documentary evidence and consequently, the denial of its prayer to be given another opportunity to present the originals of the documents that were denied admission nor to lay the predicate for the admission of secondary evidence in case the same has been lost.

WHEREFORE, premises considered, the instant petition is hereby DENIED. The Decision of the Court of Appeals in CA-G.R. CEB-SP No. 00848, dated 9 November 2005 is hereby AFFIRMED. Costs against petitioner.

SO ORDERED.

Endnotes:

2 Civil Case No. CEB-18662, penned by Judge Ramon. G. Codilla, Jr.; id. at 153-160.5 Rules on Electronic Evidence, Rule 2, Sec. 1, par. (h). 7 Revised Rules on Evidence, Rule 130, Sec. 2.11 Id. citing RULES OF COURT, Rule 130, Sec. 5.

113 [G.R. NO. 164273 : March 28, 2007]

EMMANUEL B. AZNAR, Petitioner, v. CITIBANK, N.A., (Philippines), Respondent.

D E C I S I O N

Before this Court is a Petition for Review assailing the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 62554 dated January 30, 2004 which set aside the November 25, 1998 Order of the Regional Trial Court (RTC) Branch 10, Cebu City and reinstated the Decision of RTC Branch 20 of Cebu City dated May 29, 1998 in Civil Case No. CEB-16474; and the CA Resolution dated May 26, 2004 denying petitioner's motion for reconsideration.

The facts are as follows:

Emmanuel B. Aznar (Aznar), a known businessman2 in Cebu, is a holder of a Preferred Master Credit Card (Mastercard) bearing number 5423-3920-0786-7012 issued by Citibank with a credit limit of P150,000.00. As he and his wife, Zoraida, planned to take their two grandchildren, Melissa and Richard Beane, on an Asian tour, Aznar made a total advance deposit of P485,000.00 with Citibank with the intention of increasing his credit limit to P635,000.00.3

With the use of his Mastercard, Aznar purchased plane tickets to Kuala Lumpur for his group worth P237,000.00. On July 17, 1994, Aznar, his wife and grandchildren left Cebu for the said destination.4

Aznar claims that when he presented his Mastercard in some establishments in Malaysia, Singapore and Indonesia, the same was not honored.5 And when he tried to use the same in Ingtan Tour and Travel Agency (Ingtan Agency) in Indonesia to purchase plane tickets to Bali, it was again dishonored for the reason that his card was blacklisted by Citibank. Such dishonor forced him to buy the tickets in cash.6 He further claims that his humiliation caused by the denial of his card was aggravated when Ingtan Agency spoke of swindlers trying to use blacklisted cards.7 Aznar and his group returned to the Philippines on August 10, 1994.8

On August 26, 1994, Aznar filed a complaint for damages against Citibank, docketed as Civil Case No. CEB-16474 and raffled to RTC Branch 20, Cebu City, claiming that Citibank fraudulently or with gross negligence blacklisted his Mastercard which forced him, his wife and grandchildren to abort important tour destinations and prevented them from buying certain items in their tour.9 He further claimed that he suffered mental anguish, serious anxiety, wounded feelings, besmirched reputation and social humiliation due to the wrongful blacklisting of his card.10 To prove that Citibank blacklisted his Mastercard, Aznar presented a computer print-out, denominated as ON-LINE AUTHORIZATIONS FOREIGN ACCOUNT ACTIVITY REPORT, issued to him by Ingtan Agency (Exh. "G") with the signature of one Victrina Elnado Nubi (Nubi)11 which shows that his card in question was "DECL OVERLIMIT" or declared over the limit.12

Citibank denied the allegation that it blacklisted Aznar's card. It also contended that under the terms and conditions governing the issuance and use of its credit cards, Citibank is exempt from any liability for the dishonor of its cards by any merchant affiliate, and that its liability for any action or incident which may be brought against it in relation to the issuance and use of its credit cards is limited to P1,000.00 or the actual damage proven whichever is lesser.13

To prove that they did not blacklist Aznar's card, Citibank's Credit Card Department Head, Dennis Flores, presented Warning Cancellation Bulletins which contained the list of its canceled cards covering the period of Aznar's trip.14

On May 29, 1998, RTC Branch 20, Cebu City, through Judge Ferdinand J. Marcos, rendered its decision dismissing Aznar's complaint for lack of merit.15 The trial court held that as between the computer print-out16 presented by Aznar and the Warning Cancellation Bulletins17 presented by Citibank, the latter had more weight as their due execution and authenticity were duly established by Citibank.18 The trial court also held that even if it was shown that Aznar's credit card was dishonored by a merchant establishment, Citibank was not shown to have acted with malice or bad faith when the same was dishonored.19

Aznar filed a motion for reconsideration with motion to re-raffle the case saying that Judge Marcos could not be impartial as he himself is a holder of a Citibank credit card.20 The case was re-raffled21 and on November 25, 1998, the

RTC, this time through Judge Jesus S. De la Peña of Branch 10 of Cebu City, issued an Order granting Aznar's motion for reconsideration, as follows:

WHEREFORE, the Motion for Reconsideration is hereby GRANTED. The DECISION dated May 29, 1998 is hereby reconsidered, and consequently, the defendant is hereby condemned liable to pay the following sums of money:

a) P10,000,000.00 as moral damages;

b) P5,000,000.00 as exemplary damages;

c) P1,000,000.00 as attorney's fees; and

d) P200,000.00 as litigation expenses.22

Judge De la Peña ruled that: it is improbable that a man of Aznar's stature would fabricate Exh. "G" or the computer print-out which shows that Aznar's Mastercard was dishonored for the reason that it was declared over the limit; Exh. "G" was printed out by Nubi in the ordinary or regular course of business in the modern credit card industry and Nubi was not able to testify as she was in a foreign country and cannot be reached by subpoena; taking judicial notice of the practice of automated teller machines (ATMs) and credit card facilities which readily print out bank account status, Exh. "G" can be received as prima facie evidence of the dishonor of Aznar's Mastercard; no rebutting evidence was presented by Citibank to prove that Aznar's Mastercard was not dishonored, as all it proved was that said credit card was not included in the blacklisted cards; when Citibank accepted the additional deposit of P485,000.00 from Aznar, there was an implied novation and Citibank was obligated to increase Aznar's credit limit and ensure that Aznar will not encounter any embarrassing situation with the use of his Mastercard; Citibank's failure to comply with its obligation constitutes gross negligence as it caused Aznar inconvenience, mental anguish and social humiliation; the fine prints in the flyer of the credit card limiting the liability of the bank to P1,000.00 or the actual damage proven, whichever is lower, is a contract of adhesion which must be interpreted against Citibank.23

Citibank filed an appeal with the CA and its counsel filed an administrative case against Judge De la Peña for grave misconduct, gross ignorance of the law and incompetence, claiming among others that said judge rendered his decision without having read the transcripts. The administrative case was held in abeyance pending the outcome of the appeal filed by Citibank with the CA.24 ςηαñrοblεš  Î½Î¹r†υαl  lαω  lιbrαrÿ

On January 30, 2004, the CA rendered its Decision granting Citibank's appeal thus:

WHEREFORE, the instant appeal is GRANTED. The assailed order of the Regional Trial Court, 7th Judicial Region, Branch 10, Cebu City, in Civil Case No. CEB-16474, is hereby SET ASIDE and the decision, dated 29 May 1998 of the Regional Trial Court, 7th Judicial Region, Branch 20, Cebu City in this case is REINSTATED.

SO ORDERED.25

The CA ruled that: Aznar had no personal knowledge of the blacklisting of his card and only presumed the same when it was dishonored in certain establishments; such dishonor is not sufficient to prove that his card was blacklisted by Citibank; Exh. "G" is an electronic document which must be authenticated pursuant to Section 2, Rule 5 of the Rules on Electronic Evidence26 or under Section 20 of Rule 132 of the Rules of Court27 by anyone who saw the document executed or written; Aznar, however, failed to prove the authenticity of Exh. "G", thus it must be excluded; the unrefuted testimony of Aznar that his credit card was dishonored by Ingtan Agency and certain establishments abroad is not sufficient to justify the award of damages in his favor, absent any showing that Citibank had anything to do with the said dishonor; Citibank had no absolute control over the actions of its merchant affiliates, thus it should not be held liable for the dishonor of Aznar's credit card by said establishments.28

Aznar filed a motion for reconsideration which the CA dismissed in its Resolution dated May 26, 2004.29

Parenthetically, the administrative case against Judge De la Peña was activated and on April 29, 2005, the Court's Third Division30 found respondent judge guilty of knowingly rendering an unjust judgment and ordered his suspension for six months. The Court held that Judge De la Peña erred in basing his Order on a manifestation submitted by Aznar to support his Motion for Reconsideration, when no copy of such manifestation was served on the adverse party and it was filed beyond office hours. The Court also noted that Judge De la Peña made an egregiously large award of damages in favor of Aznar which opened himself to suspicion.31

Aznar now comes before this Court on a Petition for Review alleging that: the CA erroneously made its own factual finding that his Mastercard was not blacklisted when the matter of blacklisting was already a non-issue in the November 25, 1998 Order of the RTC; the RTC found that Aznar's Mastercard was dishonored for the reason that it

was declared over the credit limit; this factual finding is supported by Exh. "G" and by his (Aznar's) testimony; the issue of dishonor on the ground of 'DECL OVERLIMIT', although not alleged in the complaint, was tried with the implied consent of the parties and should be treated as if raised in the pleadings pursuant to Section 5, Rule 10 of the Rules of Civil Procedure;32 Exh. "G" cannot be excluded as it qualifies as an electronic evidence following the Rules on Electronic Evidence which provides that print-outs are also originals for purposes of the Best Evidence Rule; Exh. "G" has remained complete and unaltered, apart from the signature of Nubi, thus the same is reliable for the purpose for which it was generated; the RTC judge correctly credited the testimony of Aznar on the issuance of the computer print-out as Aznar saw that it was signed by Nubi; said testimony constitutes the "other evidence showing the integrity and reliability of the print-out to the satisfaction of the judge" which is required under the Rules on Electronic Evidence; the trial court was also correct in finding that Citibank was grossly negligent in failing to credit the additional deposit and make the necessary entries in its systems to prevent Aznar from encountering any embarrassing situation with the use of his Mastercard.33

Citibank, in its Comment, contends that: Aznar never had personal knowledge that his credit card was blacklisted as he only presumed such fact; the issue of dishonor on the ground that the card was declared over the limit was also never tried with the implied consent of both parties; Aznar's self-serving testimony is not sufficient to prove the integrity and reliability of Exh. "G"; Aznar did not declare that it was Nubi who printed the document and that said document was printed in his presence as he merely said that the print-out was provided him; there is also no annotation on Exh. "G" to establish that it was Nubi who printed the same; assuming further that Exh. "G" is admissible and Aznar's credit card was dishonored, Citibank still cannot be held liable for damages as it only shows that Aznar's credit card was dishonored for having been declared over the limit; Aznar's cause of action against Citibank hinged on the alleged blacklisting of his card which purportedly caused its dishonor; dishonor alone, however, is not sufficient to award Aznar damages as he must prove that the dishonor was caused by a grossly negligent act of Citibank; the award of damages in favor of Aznar was based on Article 117034 of the Civil Code, i.e., there was fraud, negligence or delay in the performance of its obligation; there was no proof, however that Citibank committed fraud or delay or that it contravened its obligations towards Aznar; the terms and conditions of the credit card cannot be considered as a contract of adhesion since Aznar was entirely free to reject the card if he did not want the conditions stipulated therein; a person whose stature is such that he is expected to be more prudent with respect to his transactions cannot later on be heard to complain for being ignorant or having been forced into merely consenting to the contract.35

In his Reply, Aznar contended that to a layman, the term "blacklisting" is synonymous with the words "hot list" or "declared overlimit"; and whether his card was blacklisted or declared over the limit, the same was dishonored due to the fault or gross negligence of Citibank.36

Aznar also filed a Memorandum raising as issues the following:

I. Whether or not the augmentation deposit in the amount of P485,000.00 of the Petitioner constitutes relative extinctive novation;

II. Whether or not the purchases made by Petitioner were beyond his credit limit;

III. Whether or not the issues of dishonor by reason of overlimit was tried with the consent of the parties;

IV. Whether or not the "On Line Authorization Report" is an electronic document."

V. Whether or not the "On Line Authorization Report" constitutes electronic evidence;

VI. Whether or not the agreement between the parties is a contract of adhesion;

VII. Whether or not the Respondent is negligent in not crediting the deposits of the Respondent.37

Aznar further averred in his Memorandum that Citibank assured him that with the use of his Mastercard, he would never be turned down by any merchant store, and that under Section 43, Rule 130 of the Rules of Court, Exh. "G" is admissible in evidence.38

Citibank also filed a Memorandum reiterating its earlier arguments.39

Stripped to its essentials, the only question that needs to be answered is: whether Aznar has established his claim against Citibank.

The answer is no.

It is basic that in civil cases, the burden of proof rests on the plaintiff to establish his case based on a preponderance of evidence. The party that alleges a fact also has the burden of proving it.40

In the complaint Aznar filed before the RTC, he claimed that Citibank blacklisted his Mastercard which caused its dishonor in several establishments in Malaysia, Singapore, and Indonesia, particularly in Ingtan Agency in Indonesia where he was humiliated when its staff insinuated that he could be a swindler trying to use a blacklisted card.

As correctly found by the RTC in its May 29, 1998 Decision, Aznar failed to prove with a preponderance of evidence that Citibank blacklisted his Mastercard or placed the same on the "hot list."41

Aznar in his testimony admitted that he had no personal knowledge that his Mastercard was blacklisted by Citibank and only presumed such fact from the dishonor of his card.

Q Now, paragraph 12 also states and I quote: "its entry in the "hot" list was confirmed to be authentic".

Now, who confirmed that the blacklisting of your Preferred Citibank Mastercard was authentic?cralaw library

A. Okey. When I presented this Mastercard, my card rather, at the Merchant's store, I do not know, they called up somebody for verification then later they told me that "your card is being denied". So, I am not in a position to answer that. I do not know whom they called up; where they verified. So, when it is denied that's presumed to be blacklisted.

Q. So the word that was used was denied?cralaw library

A. Denied.

Q. And after you were told that your card was denied you presumed that it was blacklisted?cralaw library

A. Definitely.

Q. So your statement that your card was allegedly blacklisted is only your presumption drawn from the fact, from your allegations, that it was denied at the merchandise store?

A. Yes, sir.42 (Emphasis supplied)cralawlibrary

The dishonor of Aznar's Mastercard is not sufficient to support a conclusion that said credit card was blacklisted by Citibank, especially in view of Aznar's own admission that in other merchant establishments in Kuala Lumpur and Singapore, his Mastercard was accepted and honored.43

Aznar puts much weight on the ON-LINE AUTHORIZATION FOREIGN ACCOUNT ACTIVITY REPORT, a computer print-out handed to Aznar by Ingtan Agency, marked as Exh. "G", to prove that his Mastercard was dishonored for being blacklisted. On said print-out appears the words "DECL OVERLIMIT" opposite Account No. 5423-3920-0786-7012.

As correctly pointed out by the RTC and the CA, however, such exhibit cannot be considered admissible as its authenticity and due execution were not sufficiently established by petitioner.

The prevailing rule at the time of the promulgation of the RTC Decision is Section 20 of Rule 132 of the Rules of Court. It provides that whenever any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either by (a) anyone who saw the document executed or written; or (b) by evidence of the genuineness of the signature or handwriting of the maker.

Aznar, who testified on the authenticity of Exh. "G," did not actually see the document executed or written, neither was he able to provide evidence on the genuineness of the signature or handwriting of Nubi, who handed to him said computer print-out. Indeed, all he was able to allege in his testimony are the following:

Q I show to you a Computer Print Out captioned as On Line Authorization Activity Report where it is shown that the Preferred Master Card Number 5423392007867012 was denied as per notation on the margin of this Computer Print Out, is this the document evidencing the dishonor of your Preferred Master Card?

x    x    x

A Yes sir, after that Ingtan incident, I went straight to the Service Agency there and on the left hand side you will be able to see the name of the person in-charged [sic] there certifying that really my card is being blacklisted and there is the signature there of the agency.

ATTY. NAVARRO:

The witness, your honor, is pointing to the signature over the handwritten name of Victrina Elnado Nubi which I pray, your honor, that the Computer Print Out be marked as our Exhibit "G" and the remarks at the left hand bottom portion of Victorina Elnado Nubi with her signature thereon be encircled and be marked as our Exhibit "G-1".

x x x

Q Mr. Aznar, where did you secure this Computer Print Out marked as Exhibit "G"?cralaw library

A This is provided by that Agency, your honor. They were the ones who provided me with this. So what the lady did, she gave me the Statement and I requested her to sign to show proof that my Preferred Master Card has been rejected.44 (Emphasis supplied).

Even if examined under the Rules on Electronic Evidence, which took effect on August 1, 2001, and which is being invoked by Aznar in this case, the authentication of Exh. "G" would still be found wanting.

Pertinent sections of Rule 5 read:

Section 1. Burden of proving authenticity. - The person seeking to introduce an electronic document in any legal proceeding has the burden of proving its authenticity in the manner provided in this Rule.

Section 2. Manner of authentication. - Before any private electronic document offered as authentic is received in evidence, its authenticity must be proved by any of the following means:

(a) by evidence that it had been digitally signed by the person purported to have signed the same;

(b) by evidence that other appropriate security procedures or devices as may be authorized by the Supreme Court or by law for authentication of electronic documents were applied to the document; or

(c) by other evidence showing its integrity and reliability to the satisfaction of the judge.

Aznar claims that his testimony complies with par. (c), i.e., it constitutes the "other evidence showing integrity and reliability of Exh. "G" to the satisfaction of the judge." The Court is not convinced. Aznar's testimony that the person from Ingtan Agency merely handed him the computer print-out and that he thereafter asked said person to sign the same cannot be considered as sufficient to show said print-out's integrity and reliability. As correctly pointed out by Judge Marcos in his May 29, 1998 Decision, Exh. "G" does not show on its face that it was issued by Ingtan Agency as Aznar merely mentioned in passing how he was able to secure the print-out from the agency; Aznar also failed to show the specific business address of the source of the computer print-out because while the name of Ingtan Agency was mentioned by Aznar, its business address was not reflected in the print-out.45

Indeed, Aznar failed to demonstrate how the information reflected on the print-out was generated and how the said information could be relied upon as true. In fact, Aznar to repeat, testified as follows:

ATTY. NERI

Q Now, paragraph 12 also states and I quote: "its entry in the "hot" list was confirmed to be authentic"

Now, who confirmed that the blacklisting of your Preferred Citibank Mastercard was authentic?cralaw library

A Okey. When I presented this Mastercard, my card rather, at the Merchant's store, I do not know, they called up somebody for verification then later they told me that "your card is being denied". So, I am not in a position to answer that. I do not know whom they called up; where they verified. So, when it is denied that's presumed to be blacklisted.46 (Emphasis supplied)cralawlibrary

Aznar next invokes Section 43 of Rule 130 of the Rules of Court, which pertains to entries in the course of business, to support Exh. "G". Said provision reads:

Sec. 43. Entries in the course of business. - Entries made at, or near the time of the transactions to which they refer, by a person deceased or unable to testify, who was in a position to know the facts therein stated, may be received as prima facie evidence, if such person made the entries in his professional capacity or in the performance of duty and in the ordinary or regular course of business or duty.

Under this rule, however, the following conditions are required:

1. the person who made the entry must be dead, or unable to testify;

2. the entries were made at or near the time of the transactions to which they refer;

3. the entrant was in a position to know the facts stated in the entries;

4. the entries were made in his professional capacity or in the performance of a duty, whether legal, contractual, moral or religious; andcralawlibrary

5. the entries were made in the ordinary or regular course of business or duty.47

As correctly pointed out by the RTC in its May 29, 1998 Decision, there appears on the computer print-out the name of a certain "Victrina Elnado Nubi" and a signature purportedly belonging to her, and at the left dorsal side were handwritten the words "Sorry for the delay since the records had to be retrieved. Regards. Darryl Mario." It is not clear therefore if it was Nubi who encoded the information stated in the print-out and was the one who printed the same. The handwritten annotation signed by a certain Darryl Mario even suggests that it was Mario who printed the same and only handed the print-out to Nubi. The identity of the entrant, required by the provision above mentioned, was therefore not established. Neither did petitioner establish in what professional capacity did Mario or Nubi make the entries, or whether the entries were made in the performance of their duty in the ordinary or regular course of business or duty.

And even if Exh. "G" is admitted as evidence, it only shows that the use of the credit card of petitioner was denied because it was already over the limit. There is no allegation in the Complaint or evidence to show that there was gross negligence on the part of Citibank in declaring that the credit card has been used over the limit.

The Court is also perplexed that stated on Exh. "G" is the amount of "6,289,195.10" opposite petitioner's account number, which data, petitioner did not clarify.48 As plaintiff in this case, it was incumbent on him to prove that he did not actually incur the said amount which is above his credit limit. As it is, the Court cannot see how Exh. "G" could help petitioner's claim for damages.

The claim of petitioner that Citibank blacklisted his card through fraud or gross negligence is likewise effectively negated by the evidence of Citibank which was correctly upheld by the RTC and the CA, to wit:

xxx Mr. Dennis Flores, the Head of the Credit Card Department of defendant Bank, presented documents known as Warning Cancellation Bulletin for July 10, 17, 24, and 31, 1994 (Exhibits '3', '3-1' to '3-38', '4', '4-1' to '4-38' '5', '5-1' to '5-39' and '6', '6-1' to '6-39' ), for August 7, 1994 (Exhibit[s] '7', '7-1' to '7-37' ), for August 8, 1994 (Exhibit[s] '8', '8-1' to '8-20' ) which show that plaintiff's Citibank preferred mastercard was not placed in a hot list or was not blacklisted.

The Warning Cancellation Bulletins (WCB) (Exhibits '3', '4', '5', '6', '7', '8' and their submarkings) which covered the period of four (4) days in July 1994 (from July 10, 17, 24 and 31, 1994), and two (2) days in August 1994, (August 7 and 8, 1994), when plaintiff traveled in the aforementioned Asian countries showed that said Citibank preferred mastercard had never been placed in a 'hot list' or the same was blacklisted, let alone the fact that all the credit cards which had been cancelled by the defendant bank were all contained, reported and listed in said Warning Cancellation Bulletin which were issued and released on a regular basis.

These three hundred (300) Warning Cancellation Bulletins pieces of documentary proofs, all in all, adduced by defendant pointed to the fact that said plaintiff's credit car (sic) was not among those found in said bulletins as having been cancelled for the period for which the said bulletins had been issued.

Between said computer print out (Exhibit 'G' ) and the Warning Cancellation Bulletins (Exhibits '3' to '8' and their submarkings) the latter documents adduced by defendant are entitled to greater weight than that said computer print out presented by plaintiff that bears on the issue of whether the plaintiff's preferred master card was actually placed in the 'hot list' or blacklisted for the following reasons:

The first reason is that the due execution and authentication of these Warning Cancellation Bulletins (or WCB) have been duly established and identified by defendant's own witness, Dennis Flores, one of the bank's officers, who is the

head of its credit card department, and, therefore, competent to testify on the said bulletins as having been issued by the defendant bank showing that plaintiff's preferred master credit card was never blacklisted or placed in the Bank's 'hot list'. But on the other hand, plaintiff's computer print out (Exhibit 'G' ) was never authenticated or its due execution had never been duly established. Thus, between a set of duly authenticated commercial documents, the Warning Cancellation Bulletins (Exhibits '3' to '8' and their submarkings), presented by defendants (sic) and an unauthenticated private document, plaintiff's computer print out (Exhibit 'G' ), the former deserves greater evidentiary weight supporting the findings of this Court that plaintiff's preferred master card (Exhibit '1' ) had never been blacklisted at all or placed in a so-called 'hot list' by defendant.49

Petitioner next argues that with the additional deposit he made in his account which was accepted by Citibank, there was an implied novation and Citibank was under the obligation to increase his credit limit and make the necessary entries in its computerized systems in order that petitioner may not encounter any embarrassing situation with the use of his credit card. Again, the Court finds that petitioner's argument on this point has no leg to stand on.

Citibank never denied that it received petitioner's additional deposit.50 It even claimed that petitioner was able to purchase plane tickets from Cebu to Kuala Lumpur in the amount of P237,170.00, which amount was beyond his P150,000.00 limit, because it was able to credit petitioner's additional deposit to his account. Flores of Citibank testified:

COURT:

Q When was this ticket purchased, after the account was augmented

or before?cralaw library

A After the account was augmented, Your Honor, because there is no way we can approve a P250,000.00 purchase with a P150,000.00 credit limit.51

x x x

ATTY. NERI:

For the record, your honor, the deposit of P450,000.00 was made as per exhibit of the plaintiff on June 28. The purchase of the tickets amount to P237,000.00 was approved and debited on the account of Mr. Aznar on July 20, your honor. The deposit was made about a month before the purchase of the tickets as per documentary exhibits, your honor.

COURT:

So, Atty. Navarro, what do you say to that explanation?

ATTY. NAVARRO [counsel of petitioner]:

That is correct, your honor, that is borne out by the records, your honor. (Emphasis supplied)cralawlibrary

COURT: (to witness)

Q So, I think Atty. Navarro is only after whether a credit line could be extended?cralaw library

A Yes, your honor.

Q Even if there is no augmenting?cralaw library

A No, sir, it is not possible. So, the only way the P237,000.00 transaction could be approved was by way of advance payment which actually happened in this case because there is no way that the P237,000.00 can be approved with the P150,000.00 credit limit.52 (Emphasis supplied)cralawlibrary

The allegations of blacklisting not having been proved, is Citibank liable for damages for the dishonor of Aznar's Mastercard?cralaw library

Again, the answer is no.

Citibank, in its attempt to evade liability, invokes paragraphs 7 and 15 of the terms and conditions governing the issuance of its Mastercard which read:

7. MERCHANT AFFILIATES. [Citibank is] not responsible if the Card is not honored by any merchant affiliate for any reason.Furthermore, [the cardholder] will not hold [Citibank] responsible for any defective product or service purchased through the Card.

x x x

15. LIMITATION OF LIABILITY. In any action arising from this agreement or any incident thereto which [the cardholder] or any other party may file against [Citibank], [Citibank's] liability shall not exceed One Thousand Pesos [P1,000.00] or the actual damages proven, whichever is lesser.53

On this point, the Court agrees with Aznar that the terms and conditions of Citibank's Mastercard constitute a contract of adhesion. It is settled that contracts between cardholders and the credit card companies are contracts of adhesion, so-called, because their terms are prepared by only one party while the other merely affixes his signature signifying his adhesion thereto.54

In this case, paragraph 7 of the terms and conditions states that "[Citibank is] not responsible if the Card is not honored by any merchant affiliate for any reason x x x". While it is true that Citibank may have no control of all the actions of its merchant affiliates, and should not be held liable therefor, it is incorrect, however, to give it blanket freedom from liability if its card is dishonored by any merchant affiliate for any reason. Such phrase renders the statement vague and as the said terms and conditions constitute a contract of adhesion, any ambiguity in its provisions must be construed against the party who prepared the contract,55 in this case Citibank.

Citibank also invokes paragraph 15 of its terms and conditions which limits its liability to P1,000.00 or the actual damage proven, whichever is lesser.

Again, such stipulation cannot be considered as valid for being unconscionable as it precludes payment of a larger amount even though damage may be clearly proven. This Court is not precluded from ruling out blind adherence to the terms of a contract if the attendant facts and circumstances show that they should be ignored for being obviously too one-sided.56

The invalidity of the terms and conditions being invoked by Citibank, notwithstanding, the Court still cannot award damages in favor of petitioner.

It is settled that in order that a plaintiff may maintain an action for the injuries of which he complains, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff - a concurrence of injury to the plaintiff and legal responsibility by the person causing it. The underlying basis for the award of tort damages is the premise that an individual was injured in contemplation of law; thus there must first be a breach before damages may be awarded and the breach of such duty should be the proximate cause of the injury.57

It is not enough that one merely suffered sleepless nights, mental anguish or serious anxiety as a result of the actuations of the other party. It is also required that a culpable act or omission was factually established, that proof that the wrongful act or omission of the defendant is shown as the proximate cause of the damage sustained by the claimant and that the case is predicated on any of the instances expressed or envisioned by Arts. 221958 and 222059 of the Civil Code.60

In culpa contractual or breach of contract, moral damages are recoverable only if the defendant has acted fraudulently or in bad faith, or is found guilty of gross negligence amounting to bad faith, or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious or in bad faith, oppressive or abusive.61

While the Court commiserates with Aznar for whatever undue embarrassment he suffered when his credit card was dishonored by Ingtan Agency, especially when the agency's personnel insinuated that he could be a swindler trying to use blacklisted cards, the Court cannot grant his present petition as he failed to show by preponderance of evidence that Citibank breached any obligation that would make it answerable for said suffering.

As the Court pronounced in BPI Express Card Corporation v. Court of Appeals,62

We do not dispute the findings of the lower court that private respondent suffered damages as a result of the cancellation of his credit card. However, there is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt, or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury to those

instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone, the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absque injuria.63

WHEREFORE, the petition is denied for lack of merit.

SO ORDERED.

Endnotes:

26 Section 2. Manner of authentication. - Before any private electronic document offered as authentic is received in evidence, its authenticity must be proved by any of the following means:

(a) by evidence that it had been digitally signed by the person purported to have signed the same;

(b) by evidence that other appropriate security procedures or devices as may be authorized by the Supreme Court or by law for authentication of electronic documents were applied to the document; or

(c) by other evidence showing its integrity and reliability to the satisfaction of the judge.

27 Sec. 20. Proof of private document. - Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either:

(a) By anyone who saw the document executed or written; or

(b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.

32 Sec. 5. xxx When issues not raised by the pleadings are tried with the express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Such amendment of the pleadings as may be necessary to cause them to conform to the evidence and to raise these issues may be made upon motion of any party at any time, even after judgment; but failure to amend does not affect the result of the trial of these issues. xxx

34 Art. 1170. Those who in the performance of their obligation are guilty of fraud, negligence, or delay and those who in any manner contravene the tenor thereof, are liable for damages.

58 Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

(3) Seduction, abduction, rape, or other lascivious acts;

(4) Adultery or concubinage;

(5) Illegal or arbitrary detention or arrest;

(6) Illegal search;

(7) Libel, slander or any other form of defamation;

(8) Malicious prosecution;

(9) Acts mentioned in article 309;

(10) Acts and actions referred to in articles 21, 26, 27, 28, 29, 30, 32, 34, and 35.

x x x

59 Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under the circumstances, such damages are justly due. The same rule applies to breaches of contract where the defendant acted fraudulently or in bad faith.

114 [G.R. NO. 170633 : October 17, 2007]

MCC INDUSTRIAL SALES CORPORATION, Petitioner, v. SSANGYONG CORPORATION, Respondents.

D E C I S I O N

Before the Court is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals in CA-G.R. CV No. 82983 and its Resolution2 denying the motion for reconsideration thereof.

Petitioner MCC Industrial Sales (MCC), a domestic corporation with office at Binondo, Manila, is engaged in the business of importing and wholesaling stainless steel products.3 One of its suppliers is the Ssangyong Corporation (Ssangyong),4 an international trading company5 with head office in Seoul, South Korea and regional headquarters in Makati City, Philippines.6 The two corporations conducted business through telephone calls and facsimile or telecopy transmissions.7 Ssangyong would send the pro forma invoices containing the details of the steel product order to MCC; if the latter conforms thereto, its representative affixes his signature on the faxed copy and sends it back to Ssangyong, again by fax.8

On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter9 addressed to Gregory Chan, MCC Manager [also the President10 of Sanyo Seiki Stainless Steel Corporation], to confirm MCC's and Sanyo Seiki's order of 220 metric tons (MT) of hot rolled stainless steel under a preferential rate of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and affixed his signature on the conforme portion of the letter.11

On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-POSTSO40112 containing the terms and conditions of the transaction. MCC sent back by fax to Ssangyong the invoice bearing the conformity signature13 of Chan. As stated in the pro forma invoice, payment for the ordered steel products would be made through an irrevocable letter of credit (L/C) at sight in favor of Ssangyong.14 Following their usual practice, delivery of the goods was to be made after the L/C had been opened.

In the meantime, because of its confirmed transaction with MCC, Ssangyong placed the order with its steel manufacturer, Pohang Iron and Steel Corporation (POSCO), in South Korea15 and paid the same in full.

Because MCC could open only a partial letter of credit, the order for 220MT of steel was split into two,16 one for 110MT covered by Pro Forma Invoice No. ST2-POSTS0401-117 and another for 110MT covered by ST2-POSTS0401-2,18 both dated April 17, 2000.

On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki and Chan, by way of a fax transmittal, that it was ready to ship 193.597MT of stainless steel from Korea to the Philippines. It requested that the opening of the L/C be facilitated.19 Chan affixed his signature on the fax transmittal and returned the same, by fax, to Ssangyong.20

Two days later, on June 22, 2000, Ssangyong Manila Office informed Sanyo Seiki, thru Chan, that it was able to secure a US$30/MT price adjustment on the contracted price of US$1,860.00/MT for the 200MT stainless steel, and that the goods were to be shipped in two tranches, the first 100MT on that day and the second 100MT not later than June 27, 2000. Ssangyong reiterated its request for the facilitation of the L/C's opening.21

Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to the Treasury Group of Sanyo Seiki that it was looking forward to receiving the L/C details and a cable copy thereof that day.22 Ssangyong sent a separate letter of the same date to Sanyo Seiki requesting for the opening of the L/C covering payment of the first 100MT not later than June 28, 2000.23 Similar letters were transmitted by Ssangyong Manila Office on June 27, 2000.24 On June 28, 2000, Ssangyong sent another facsimile letter to MCC stating that its principal in Korea was already in a difficult situation25 because of the failure of Sanyo Seiki and MCC to open the L/C's.

The following day, June 29, 2000, Ssangyong received, by fax, a letter signed by Chan, requesting an extension of time to open the L/C because MCC's credit line with the bank had been fully availed of in connection with another transaction, and MCC was waiting for an additional credit line.26 On the same date, Ssangyong replied, requesting that it be informed of the date when the L/C would be opened, preferably at the earliest possible time, since its Steel Team 2 in Korea was having problems and Ssangyong was incurring warehousing costs.27 To maintain their good business relationship and to support MCC in its financial predicament, Ssangyong offered to negotiate with its steel manufacturer, POSCO, another US$20/MT discount on the price of the stainless steel ordered. This was intimated in Ssangyong's June 30, 2000 letter to MCC.28 On July 6, 2000, another follow-up letter29 for the opening of the L/C was sent by Ssangyong to MCC.

However, despite Ssangyong's letters, MCC failed to open a letter of credit.30 Consequently, on August 15, 2000, Ssangyong, through counsel, wrote Sanyo Seiki that if the L/C's were not opened, Ssangyong would be compelled to cancel the contract and hold MCC liable for damages for breach thereof amounting to US$96,132.18, inclusive of warehouse expenses, related interests and charges.31

Later, Pro Forma Invoice Nos. ST2-POSTS080-132 and ST2-POSTS080-233 dated August 16, 2000 were issued by Ssangyong and sent via fax to MCC. The invoices slightly varied the terms of the earlier pro forma invoices (ST2-POSTSO401, ST2-POSTS0401-1 and ST2-POSTS0401-2), in that the quantity was now officially 100MT per invoice and the price was reduced to US$1,700.00 per MT. As can be gleaned from the photocopies of the said August 16, 2000 invoices submitted to the court, they both bear the conformity signature of MCC Manager Chan.

On August 17, 2000, MCC finally opened an L/C with PCIBank for US$170,000.00 covering payment for 100MT of stainless steel coil under Pro Forma Invoice No. ST2-POSTS080-2 .34 The goods covered by the said invoice were then shipped to and received by MCC.35

MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan, requesting for a price adjustment of the order stated in Pro Forma Invoice No. ST2-POSTS080-1, considering that the prevailing price of steel at that time was US$1,500.00/MT, and that MCC lost a lot of money due to a recent strike.36

Ssangyong rejected the request, and, on August 23, 2000, sent a demand letter37 to Chan for the opening of the second and last L/C of US$170,000.00 with a warning that, if the said L/C was not opened by MCC on August 26, 2000, Ssangyong would be constrained to cancel the contract and hold MCC liable for US$64,066.99 (representing cost difference, warehousing expenses, interests and charges as of August 15, 2000) and other damages for breach. Chan failed to reply.

Exasperated, Ssangyong through counsel wrote a letter to MCC, on September 11, 2000, canceling the sales contract under ST2-POSTS0401-1 /ST2-POSTS0401-2, and demanding payment of US$97,317.37 representing losses, warehousing expenses, interests and charges.38

Ssangyong then filed, on November 16, 2001, a civil action for damages due to breach of contract against defendants MCC, Sanyo Seiki and Gregory Chan before the Regional Trial Court of Makati City. In its complaint,39 Ssangyong alleged that defendants breached their contract when they refused to open the L/C in the amount of US$170,000.00 for the remaining 100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2.

After Ssangyong rested its case, defendants filed a Demurrer to Evidence40 alleging that Ssangyong failed to present the original copies of the pro forma invoices on which the civil action was based. In an Order dated April 24, 2003, the court denied the demurrer, ruling that the documentary evidence presented had already been admitted in the December 16, 2002 Order41 and their admissibility finds support in Republic Act (R.A.) No. 8792, otherwise known as the Electronic Commerce Act of 2000. Considering that both testimonial and documentary evidence tended to substantiate the material allegations in the complaint, Ssangyong's evidence sufficed for purposes of a prima facie case.42

After trial on the merits, the RTC rendered its Decision43 on March 24, 2004, in favor of Ssangyong. The trial court ruled that when plaintiff agreed to sell and defendants agreed to buy the 220MT of steel products for the price of US$1,860 per MT, the contract was perfected. The subject transaction was evidenced by Pro Forma Invoice Nos. ST2-POSTS0401 - 1 and ST2-POSTS0401-2, which were later amended only in terms of reduction of volume as well as the price per MT, following Pro Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2. The RTC, however, excluded Sanyo Seiki from liability for lack of competent evidence. The fallo of the decision reads:

WHEREFORE, premises considered, Judgment is hereby rendered ordering defendants MCC Industrial Sales Corporation and Gregory Chan, to pay plaintiff, jointly and severally the following:

1) Actual damages of US$93,493.87 representing the outstanding principal claim plus interest at the rate of 6% per annum from March 30, 2001.

2) Attorney's fees in the sum of P50,000.00 plus P2,000.00 per counsel's appearance in court, the same being deemed just and equitable considering that by reason of defendants' breach of their obligation under the subject contract, plaintiff was constrained to litigate to enforce its rights and recover for the damages it sustained, and therefore had to engage the services of a lawyer.

3) Costs of suit.

No award of exemplary damages for lack of sufficient basis.

SO ORDERED.44

On April 22, 2004, MCC and Chan, through their counsel of record, Atty. Eladio B. Samson, filed their Notice of Appeal.45 On June 8, 2004, the law office of Castillo Zamora & Poblador entered its appearance as their collaborating counsel.

In their Appeal Brief filed on March 9, 2005,46 MCC and Chan raised before the CA the following errors of the RTC:

I. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE

A. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OF STEEL PRODUCTS FROM APPELLEE, INSTEAD OF ONLY 100 METRIC TONS.

1. THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN EVIDENCE THE PRO FORMA INVOICES WITH REFERENCE NOS. ST2 - POSTS0401-1 AND ST2-POSTS0401-2.

II. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ACTUAL DAMAGES TO APPELLEE.

III. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ATTORNEY'S FEES TO APPELLEE.

IV. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING APPELLANT GREGORY CHAN JOINTLY AND SEVERALLY LIABLE WITH APPELLANT MCC.47

On August 31, 2005, the CA rendered its Decision48 affirming the ruling of the trial court, but absolving Chan of any liability. The appellate court ruled, among others, that Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F") were admissible in evidence, although they were mere facsimile printouts of MCC's steel orders.49 The dispositive portion of the appellate court's decision reads:

WHEREFORE, premises considered, the Court holds:

(1) The award of actual damages, with interest, attorney's fees and costs ordered by the lower court is hereby AFFIRMED.

(2) Appellant Gregory Chan is hereby ABSOLVED from any liability.

SO ORDERED.50

A copy of the said Decision was received by MCC's and Chan's principal counsel, Atty. Eladio B. Samson, on September 14, 2005.51 Their collaborating counsel, Castillo Zamora & Poblador,52 likewise, received a copy of the CA decision on September 19, 2005.53

On October 4, 2005, Castillo Zamora & Poblador, on behalf of MCC, filed a motion for reconsideration of the said decision.54 Ssangyong opposed the motion contending that the decision of the CA had become final and executory on account of the failure of MCC to file the said motion within the reglementary period. The appellate court resolved, on November 22, 2005, to deny the motion on its merits,55 without, however, ruling on the procedural issue raised.

Aggrieved, MCC filed a Petition for Review on Certiorari 56 before this Court, imputing the following errors to the Court of Appeals:

THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS BY

REVERSING THE COURT A QUO'S DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. 02-124 CONSIDERING THAT:

I. THE COURT OF APPEALS ERRED IN SUSTAINING THE ADMISSIBILITY IN EVIDENCE OF THE PRO-FORMA INVOICES WITH REFERENCE NOS. ST2-POSTSO401-1 AND ST2-POSTSO401-2, DESPITE THE FACT THAT THE SAME WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS.

II. THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS FACT THAT, EVEN ASSUMING PETITIONER BREACHED THE SUPPOSED CONTRACT, THE FACT IS THAT PETITIONER FAILED TO PROVE THAT IT SUFFERED ANY DAMAGES AND THE AMOUNT THEREOF.

III. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF US$93,493.87 IS SIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEAST REDUCED, IF NOT DELETED BY THE COURT OF APPEALS.57

In its Comment, Ssangyong sought the dismissal of the petition, raising the following arguments: that the CA decision dated 15 August 2005 is already final and executory, because MCC's motion for reconsideration was filed beyond the reglementary period of 15 days from receipt of a copy thereof, and that, in any case, it was a pro forma motion; that MCC breached the contract for the purchase of the steel products when it failed to open the required letter of credit; that the printout copies and/or photocopies of facsimile or telecopy transmissions were properly admitted by the trial court because they are considered original documents under R.A. No. 8792; and that MCC is liable for actual damages and attorney's fees because of its breach, thus, compelling Ssangyong to litigate.

The principal issues that this Court is called upon to resolve are the following:

I - Whether the CA decision dated 15 August 2005 is already final and executory;

II - Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as such;

III - Whether there was a perfected contract of sale between MCC and Ssangyong, and, if in the affirmative, whether MCC breached the said contract; andcralawlibrary

IV - Whether the award of actual damages and attorney's fees in favor of Ssangyong is proper and justified.

- I -

It cannot be gainsaid that in Albano v. Court of Appeals,58 we held that receipt of a copy of the decision by one of several counsels on record is notice to all, and the period to appeal commences on such date even if the other counsel has not yet received a copy of the decision. In this case, when Atty. Samson received a copy of the CA decision on September 14, 2005, MCC had only fifteen (15) days within which to file a motion for reconsideration conformably with Section 1, Rule 52 of the Rules of Court, or to file a Petition for Review on Certiorari in accordance with Section 2, Rule 45. The period should not be reckoned from September 29, 2005 (when Castillo Zamora & Poblador received their copy of the decision) because notice to Atty. Samson is deemed notice to collaborating counsel.

We note, however, from the records of the CA, that it was Castillo Zamora & Poblador, not Atty. Samson, which filed both MCC's and Chan's Brief and Reply Brief. Apparently, the arrangement between the two counsels was for the collaborating, not the principal, counsel to file the appeal brief and subsequent pleadings in the CA. This explains why it was Castillo Zamora & Poblador which filed the motion for the reconsideration of the CA decision, and they did so on October 5, 2005, well within the 15-day period from September 29, 2005, when they received their copy of the CA decision. This could also be the reason why the CA did not find it necessary to resolve the question of the timeliness of petitioner's motion for reconsideration, even as the CA denied the same.

Independent of this consideration though, this Court assiduously reviewed the records and found that strong concerns of substantial justice warrant the relaxation of this rule.

In Philippine Ports Authority v. Sargasso Construction and Development Corporation,59 we ruled that:

In Orata v. Intermediate Appellate Court, we held that where strong considerations of substantive justice are manifest in the petition, this Court may relax the strict application of the rules of procedure in the exercise of its legal jurisdiction. In addition to the basic merits of the main case, such a petition usually embodies justifying circumstance which warrants our heeding to the petitioner's cry for justice in spite of the earlier negligence of counsel. As we held in Obut v. Court of Appeals:

[W]e cannot look with favor on a course of action which would place the administration of justice in a straight jacket for then the result would be a poor kind of justice if there would be justice at all. Verily, judicial orders, such as the one subject of this petition, are issued to be obeyed, nonetheless a non-compliance is to be dealt with as the circumstances attending the case may warrant. What should guide judicial action is the principle that a party-litigant is to be given the fullest opportunity to establish the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities.

The rules of procedure are used only to secure and not override or frustrate justice. A six-day delay in the perfection of the appeal, as in this case, does not warrant the outright dismissal of the appeal. In Development Bank of the Philippines v. Court of Appeals, we gave due course to the petitioner's appeal despite the late filing of its brief in the appellate court because such appeal involved public interest. We stated in the said case that the Court may exempt a particular case from a strict application of the rules of procedure where the appellant failed to perfect its appeal within the reglementary period, resulting in the appellate court's failure to obtain jurisdiction over the case. In Republic v. Imperial, Jr., we also held that there is more leeway to exempt a case from the strictness of procedural rules when the appellate court has already obtained jurisdiction over the appealed case. We emphasize that:

[T]he rules of procedure are mere tools intended to facilitate the attainment of justice, rather than frustrate it. A strict and rigid application of the rules must always be eschewed when it would subvert the rule's primary objective of enhancing fair trials and expediting justice. Technicalities should never be used to defeat the substantive rights of the other party. Every party-litigant must be afforded the amplest opportunity for the proper and just determination of his cause, free from the constraints of technicalities.60

Moreover, it should be remembered that the Rules were promulgated to set guidelines in the orderly administration of justice, not to shackle the hand that dispenses it. Otherwise, the courts would be consigned to being mere slaves to technical rules, deprived of their judicial discretion. Technicalities must take a backseat to substantive rights. After all, it is circumspect leniency in this respect that will give the parties the fullest opportunity to ventilate the merits of their respective causes, rather than have them lose life, liberty, honor or property on sheer technicalities.61

The other technical issue posed by respondent is the alleged pro forma nature of MCC's motion for reconsideration, ostensibly because it merely restated the arguments previously raised and passed upon by the CA.

In this connection, suffice it to say that the mere restatement of arguments in a motion for reconsideration does not per se result in a pro forma motion. In Security Bank and Trust Company, Inc. v. Cuenca,62 we held that a motion for reconsideration may not be necessarily pro forma even if it reiterates the arguments earlier passed upon and rejected by the appellate court. A movant may raise the same arguments precisely to convince the court that its ruling was erroneous. Furthermore, the pro forma rule will not apply if the arguments were not sufficiently passed upon and answered in the decision sought to be reconsidered.

- II -

The second issue poses a novel question that the Court welcomes. It provides the occasion for this Court to pronounce a definitive interpretation of the equally innovative provisions of the Electronic Commerce Act of 2000 (R.A. No. 8792) vis - à-vis the Rules on Electronic Evidence.

Although the parties did not raise the question whether the original facsimile transmissions are "electronic data messages" or "electronic documents" within the context of the Electronic Commerce Act (the petitioner merely assails as inadmissible evidence the photocopies of the said facsimile transmissions), we deem it appropriate to determine first whether the said fax transmissions are indeed within the coverage of R.A. No. 8792 before ruling on whether the photocopies thereof are covered by the law. In any case, this Court has ample authority to go beyond the pleadings when, in the interest of justice or for the promotion of public policy, there is a need to make its own findings in order to support its conclusions.63

Petitioner contends that the photocopies of the pro forma invoices presented by respondent Ssangyong to prove the perfection of their supposed contract of sale are inadmissible in evidence and do not fall within the ambit of R.A. No. 8792, because the law merely admits as the best evidence the original fax transmittal. On the other hand, respondent posits that, from a reading of the law and the Rules on Electronic Evidence, the original facsimile transmittal of the pro forma invoice is admissible in evidence since it is an electronic document and, therefore, the best evidence under the law and the Rules. Respondent further claims that the photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are admissible under the Rules on Evidence because the respondent sufficiently explained the non-production of the original fax transmittals.

In resolving this issue, the appellate court ruled as follows:

Admissibility of Pro FormaInvoices; Breach of Contractby Appellants

Turning first to the appellants' argument against the admissibility of the Pro Forma Invoices with Reference Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E", "E-1" and "F", pp. 215-218, Records), appellants argue that the said documents are inadmissible (sic) being violative of the best evidence rule.

The argument is untenable.

The copies of the said pro-forma invoices submitted by the appellee are admissible in evidence, although they are mere electronic facsimile printouts of appellant's orders. Such facsimile printouts are considered Electronic Documents under the New Rules on Electronic Evidence, which came into effect on August 1, 2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC).

"(h) 'Electronic document' refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and any printout or output, readable by sight or other means, which accurately reflects the electronic data message or electronic document. For purposes of these Rules, the term 'electronic document' may be used interchangeably with 'electronic data message'.

An electronic document shall be regarded as the equivalent of an original document under the Best Evidence Rule, as long as it is a printout or output readable by sight or other means, showing to reflect the data accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)

The ruling of the Appellate Court is incorrect. R.A. No. 8792,64 otherwise known as the Electronic Commerce Act of 2000, considers an electronic data message or an electronic document as the functional equivalent of a written document for evidentiary purposes.65 The Rules on Electronic Evidence66 regards an electronic document as admissible in evidence if it complies with the rules on admissibility prescribed by the Rules of Court and related laws, and is authenticated in the manner prescribed by the said Rules.67 An electronic document is also the equivalent of an original document under the Best Evidence Rule, if it is a printout or output readable by sight or other means, shown to reflect the data accurately.68

Thus, to be admissible in evidence as an electronic data message or to be considered as the functional equivalent of an original document under the Best Evidence Rule, the writing must foremost be an "electronic data message" or an "electronic document."

The Electronic Commerce Act of 2000 defines electronic data message and electronic document as follows:

Sec. 5. Definition of Terms. For the purposes of this Act, the following terms are defined, as follows:

xxx

c. "Electronic Data Message" refers to information generated, sent, received or stored by electronic, optical or similar means.

xxx

f. "Electronic Document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically.

The Implementing Rules and Regulations (IRR) of R.A. No. 8792,69 which was signed on July 13, 2000 by the then Secretaries of the Department of Trade and Industry, the Department of Budget and Management, and then Governor of the Bangko Sentral ng Pilipinas, defines the terms as:

Sec. 6. Definition of Terms. For the purposes of this Act and these Rules, the following terms are defined, as follows:

xxx

(e) "Electronic Data Message" refers to information generated, sent, received or stored by electronic, optical or similar means, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy. Throughout these Rules, the term "electronic data message" shall be equivalent to and be used interchangeably with "electronic document."

x x x

(h) "Electronic Document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. Throughout these Rules, the term "electronic document" shall be equivalent to and be used interchangeably with "electronic data message."

The phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy" in the IRR's definition of "electronic data message" is copied from the Model Law on Electronic Commerce adopted by the United Nations Commission on International Trade Law (UNCITRAL),70 from which majority of the provisions of R.A. No. 8792 were taken.71 While Congress deleted this phrase in the Electronic Commerce Act of 2000, the drafters of the IRR reinstated it. The deletion by Congress of the said phrase is significant and pivotal, as discussed hereunder.

The clause on the interchangeability of the terms "electronic data message" and "electronic document" was the result of the Senate of the Philippines' adoption, in Senate Bill 1902, of the phrase "electronic data message" and the House of Representative's employment, in House Bill 9971, of the term "electronic document."72 In order to expedite the reconciliation of the two versions, the technical working group of the Bicameral Conference Committee adopted both terms and intended them to be the equivalent of each one.73 Be that as it may, there is a slight difference between the two terms. While "data message" has reference to information electronically sent, stored or transmitted, it does not necessarily mean that it will give rise to a right or extinguish an obligation,74 unlike an electronic document. Evident from the law, however, is the legislative intent to give the two terms the same construction.

The Rules on Electronic Evidence promulgated by this Court defines the said terms in the following manner:

SECTION 1. Definition of Terms. - For purposes of these Rules, the following terms are defined, as follows:

x x x

(g) "Electronic data message" refers to information generated, sent, received or stored by electronic, optical or similar means.

(h) "Electronic document" refers to information or the representation of information, data, figures, symbols or other modes of written expression, described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically. It includes digitally signed documents and print-out or output, readable by sight or other means, which accurately reflects the electronic data message or electronic document. For purposes of these Rules, the term "electronic document" may be used interchangeably with "electronic data message."

Given these definitions, we go back to the original question: Is an original printout of a facsimile transmission an electronic data message or electronic document?cra lawlibrary

The definitions under the Electronic Commerce Act of 2000, its IRR and the Rules on Electronic Evidence, at first glance, convey the impression that facsimile transmissions are electronic data messages or electronic documents because they are sent by electronic means. The expanded definition of an "electronic data message" under the IRR, consistent with the UNCITRAL Model Law, further supports this theory considering that the enumeration "xxx [is] not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy." And to telecopy is to send a document from one place to another via a fax machine.75

As further guide for the Court in its task of statutory construction, Section 37 of the Electronic Commerce Act of 2000 provides that

Unless otherwise expressly provided for, the interpretation of this Act shall give due regard to its international origin and the need to promote uniformity in its application and the observance of good faith in international trade relations. The generally accepted principles of international law and convention on electronic commerce shall likewise be considered.

Obviously, the "international origin" mentioned in this section can only refer to the UNCITRAL Model Law, and the UNCITRAL's definition of "data message":

"Data message" means information generated, sent, received or stored by electronic, optical or similar means including, but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.76

is substantially the same as the IRR's characterization of an "electronic data message."

However, Congress deleted the phrase, "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy," and replaced the term "data message" (as found in the UNCITRAL Model Law ) with "electronic data message." This legislative divergence from what is assumed as the term's "international origin" has bred uncertainty and now impels the Court to make an inquiry into the true intent of the framers of the law. Indeed, in the construction or interpretation of a legislative measure, the primary rule is to search for and determine the intent and spirit of the law.77 A construction should be rejected that gives to the language used in a statute a meaning that does not accomplish the purpose for which the statute was enacted, and that tends to defeat the ends which are sought to be attained by the enactment.78

Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of Senate Bill 1902 (the predecessor of R.A. No. 8792), sponsored the bill on second reading, he proposed to adopt the term "data message" as formulated and defined in the UNCITRAL Model Law.79 During the period of amendments, however, the term evolved into "electronic data message," and the phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy" in the UNCITRAL Model Law was deleted. Furthermore, the term "electronic data message," though maintaining its description under the UNCITRAL Model Law, except for the aforesaid deleted phrase, conveyed a different meaning, as revealed in the following proceedings:

x x x

Senator Santiago. Yes, Mr. President. I will furnish a copy together with the explanation of this proposed amendment.

And then finally, before I leave the Floor, may I please be allowed to go back to Section 5; the Definition of Terms. In light of the acceptance by the good Senator of my proposed amendments, it will then become necessary to add certain terms in our list of terms to be defined. I would like to add a definition on what is "data," what is "electronic record" and what is an "electronic record system."

If the gentleman will give me permission, I will proceed with the proposed amendment on Definition of Terms, Section 5.

Senator Magsaysay. Please go ahead, Senator Santiago.

Senator Santiago. We are in Part 1, short title on the Declaration of Policy, Section 5, Definition of Terms.

At the appropriate places in the listing of these terms that have to be defined since these are arranged alphabetically, Mr. President, I would like to insert the term DATA and its definition. So, the amendment will read: "DATA" MEANS REPRESENTATION, IN ANY FORM, OF INFORMATION OR CONCEPTS.

The explanation is this: This definition of "data" or "data" as it is now fashionably pronounced in America - - the definition of "data" ensures that our bill applies to any form of information in an electronic record, whether these are figures, facts or ideas.

So again, the proposed amendment is this: "DATA" MEANS REPRESENTATIONS, IN ANY FORM, OF INFORMATION OR CONCEPTS.

Senator Magsaysay. May I know how will this affect the definition of "Data Message" which encompasses electronic records, electronic writings and electronic documents?cra lawlibrary

Senator Santiago. These are completely congruent with each other. These are compatible. When we define "data," we are simply reinforcing the definition of what is a data message.

Senator Magsaysay. It is accepted, Mr. President.

Senator Santiago. Thank you. The next term is "ELECTRONIC RECORD." The proposed amendment is as follows:

"ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR STORED ON ANY MEDIUM IN OR BY A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE, THAT CAN BE READ OR PERCEIVED BY A PERSON OR A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE. IT INCLUDES A DISPLAY, PRINTOUT OR OTHER OUTPUT OF THAT DATA.

The explanation for this term and its definition is as follows: The term "ELECTRONIC RECORD" fixes the scope of our bill. The record is the data. The record may be on any medium. It is electronic because it is recorded or stored in or by a computer system or a similar device.

The amendment is intended to apply, for example, to data on magnetic strips on cards or in Smart cards. As drafted, it would not apply to telexes or faxes, except computer-generated faxes, unlike the United Nations model law on electronic commerce. It would also not apply to regular digital telephone conversations since the information is not recorded. It would apply to voice mail since the information has been recorded in or by a device similar to a computer. Likewise, video records are not covered. Though when the video is transferred to a website, it would be covered because of the involvement of the computer. Music recorded by a computer system on a compact disc would be covered.

In short, not all data recorded or stored in digital form is covered. A computer or a similar device has to be involved in its creation or storage. The term "similar device" does not extend to all devices that create or store data in digital form. Although things that are not recorded or preserved by or in a computer system are omitted from this bill, these may well be admissible under other rules of law. This provision focuses on replacing the search for originality proving the reliability of systems instead of that of individual records and using standards to show systems reliability.

Paper records that are produced directly by a computer system such as printouts are themselves electronic records being just the means of intelligible display of the contents of the record. Photocopies of the printout would be paper record subject to the usual rules about copies, but the original printout would be subject to the rules of admissibility of this bill.

However, printouts that are used only as paper records and whose computer origin is never again called on are treated as paper records. In that case, the reliability of the computer system that produces the record is irrelevant to its reliability.

Senator Magsaysay. Mr. President, if my memory does not fail me, earlier, the lady Senator accepted that we use the term "Data Message" rather than "ELECTRONIC RECORD" in being consistent with the UNCITRAL term of "Data Message." So with the new amendment of defining "ELECTRONIC RECORD," will this affect her accepting of the use of "Data Message" instead of "ELECTRONIC RECORD"?cra lawlibrary

Senator Santiago. No, it will not. Thank you for reminding me. The term I would like to insert is ELECTRONIC DATA MESSAGE in lieu of "ELECTRONIC RECORD."

Senator Magsaysay. Then we are, in effect, amending the term of the definition of "Data Message" on page 2A, line 31, to which we have no objection.

Senator Santiago. Thank you, Mr. President.

x x x

Senator Santiago. Mr. President, I have proposed all the amendments that I desire to, including the amendment on the effect of error or change. I will provide the language of the amendment together with the explanation supporting that amendment to the distinguished sponsor and then he can feel free to take it up in any session without any further intervention.

Senator Magsaysay. Before we end, Mr. President, I understand from the proponent of these amendments that these are based on the Canadian E-commerce Law of 1998. Is that not right?cra lawlibrary

Senator Santiago. That is correct.80

Thus, when the Senate consequently voted to adopt the term "electronic data message," it was consonant with the explanation of Senator Miriam Defensor-Santiago that it would not apply "to telexes or faxes, except computer-generated faxes, unlike the United Nations model law on electronic commerce." In explaining the term "electronic record" patterned after the E-Commerce Law of Canada, Senator Defensor-Santiago had in mind the term "electronic data message." This term then, while maintaining part of the UNCITRAL Model Law's terminology of "data message," has assumed a different context, this time, consonant with the term "electronic record" in the law of Canada. It

accounts for the addition of the word "electronic" and the deletion of the phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy." Noteworthy is that the Uniform Law Conference of Canada, explains the term "electronic record," as drafted in the Uniform Electronic Evidence Act, in a manner strikingly similar to Sen. Santiago's explanation during the Senate deliberations:

"Electronic record" fixes the scope of the Act. The record is the data. The record may be any medium. It is "electronic" because it is recorded or stored in or by a computer system or similar device. The Act is intended to apply, for example, to data on magnetic strips on cards, or in smart cards. As drafted, it would not apply to telexes or faxes (except computer-generated faxes), unlike the United Nations Model Law on Electronic Commerce. It would also not apply to regular digital telephone conversations, since the information is not recorded. It would apply to voice mail, since the information has been recorded in or by a device similar to a computer. Likewise video records are not covered, though when the video is transferred to a Web site it would be, because of the involvement of the computer. Music recorded by a computer system on a compact disk would be covered.

In short, not all data recorded or stored in "digital" form is covered. A computer or similar device has to be involved in its creation or storage. The term "similar device" does not extend to all devices that create or store data in digital form. Although things that are not recorded or preserved by or in a computer system are omitted from this Act, they may well be admissible under other rules of law. This Act focuses on replacing the search for originality, proving the reliability of systems instead of that of individual records, and using standards to show systems reliability.

Paper records that are produced directly by a computer system, such as printouts, are themselves electronic records, being just the means of intelligible display of the contents of the record. Photocopies of the printout would be paper records subject to the usual rules about copies, but the "original" printout would be subject to the rules of admissibility of this Act.

However, printouts that are used only as paper records, and whose computer origin is never again called on, are treated as paper records. See subsection 4(2). In this case the reliability of the computer system that produced the record is relevant to its reliability.81

There is no question then that when Congress formulated the term "electronic data message," it intended the same meaning as the term "electronic record" in the Canada law. This construction of the term "electronic data message," which excludes telexes or faxes, except computer-generated faxes, is in harmony with the Electronic Commerce Law's focus on "paperless" communications and the "functional equivalent approach"82 that it espouses. In fact, the deliberations of the Legislature are replete with discussions on paperless and digital transactions.

Facsimile transmissions are not, in this sense, "paperless," but verily are paper-based.

A facsimile machine, which was first patented in 1843 by Alexander Bain,83 is a device that can send or receive pictures and text over a telephone line. It works by digitizing an image dividing it into a grid of dots. Each dot is either on or off, depending on whether it is black or white. Electronically, each dot is represented by a bit that has a value of either 0 (off) or 1 (on). In this way, the fax machine translates a picture into a series of zeros and ones (called a bit map) that can be transmitted like normal computer data. On the receiving side, a fax machine reads the incoming data, translates the zeros and ones back into dots, and reprints the picture.84 A fax machine is essentially an image scanner, a modem and a computer printer combined into a highly specialized package. The scanner converts the content of a physical document into a digital image, the modem sends the image data over a phone line, and the printer at the other end makes a duplicate of the original document.85 Thus, in Garvida v. Sales, Jr.,86 where we explained the unacceptability of filing pleadings through fax machines, we ruled that:

A facsimile or fax transmission is a process involving the transmission and reproduction of printed and graphic matter by scanning an original copy, one elemental area at a time, and representing the shade or tone of each area by a specified amount of electric current. The current is transmitted as a signal over regular telephone lines or via microwave relay and is used by the receiver to reproduce an image of the elemental area in the proper position and the correct shade. The receiver is equipped with a stylus or other device that produces a printed record on paper referred to as a facsimile.

x x x A facsimile is not a genuine and authentic pleading. It is, at best, an exact copy preserving all the marks of an original. Without the original, there is no way of determining on its face whether the facsimile pleading is genuine and authentic and was originally signed by the party and his counsel. It may, in fact, be a sham pleading.87

Accordingly, in an ordinary facsimile transmission, there exists an original paper-based information or data that is scanned, sent through a phone line, and re-printed at the receiving end. Be it noted that in enacting the Electronic Commerce Act of 2000, Congress intended virtual or paperless writings to be the functional equivalent and to have the same legal function as paper-based documents.88 Further, in a virtual or paperless environment, technically, there is no original copy to speak of, as all direct printouts of the virtual reality are the same, in all respects, and are

considered as originals.89 Ineluctably, the law's definition of "electronic data message," which, as aforesaid, is interchangeable with "electronic document," could not have included facsimile transmissions, which have an original paper-based copy as sent and a paper-based facsimile copy as received. These two copies are distinct from each other, and have different legal effects. While Congress anticipated future developments in communications and computer technology90 when it drafted the law, it excluded the early forms of technology, like telegraph, telex and telecopy (except computer-generated faxes, which is a newer development as compared to the ordinary fax machine to fax machine transmission), when it defined the term "electronic data message."

Clearly then, the IRR went beyond the parameters of the law when it adopted verbatim the UNCITRAL Model Law's definition of "data message," without considering the intention of Congress when the latter deleted the phrase "but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy." The inclusion of this phrase in the IRR offends a basic tenet in the exercise of the rule-making power of administrative agencies. After all, the power of administrative officials to promulgate rules in the implementation of a statute is necessarily limited to what is found in the legislative enactment itself. The implementing rules and regulations of a law cannot extend the law or expand its coverage, as the power to amend or repeal a statute is vested in the Legislature.91 Thus, if a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails, because the law cannot be broadened by a mere administrative issuance an administrative agency certainly cannot amend an act of Congress.92 Had the Legislature really wanted ordinary fax transmissions to be covered by the mantle of the Electronic Commerce Act of 2000, it could have easily lifted without a bit of tatter the entire wordings of the UNCITRAL Model Law.

Incidentally, the National Statistical Coordination Board Task Force on the Measurement of E-Commerce,93 on November 22, 2006, recommended a working definition of "electronic commerce," as "[a]ny commercial transaction conducted through electronic, optical and similar medium, mode, instrumentality and technology. The transaction includes the sale or purchase of goods and services, between individuals, households, businesses and governments conducted over computer-mediated networks through the Internet, mobile phones, electronic data interchange (EDI) and other channels through open and closed networks." The Task Force's proposed definition is similar to the Organization of Economic Cooperation and Development's (OECD's) broad definition as it covers transactions made over any network, and, in addition, it adopted the following provisions of the OECD definition: (1) for transactions, it covers sale or purchase of goods and services; (2) for channel/network, it considers any computer-mediated network and NOT limited to Internet alone; (3) it excludes transactions received/placed using fax, telephone or non-interactive mail; (4) it considers payments done online or offline; and (5) it considers delivery made online (like downloading of purchased books, music or software programs) or offline (deliveries of goods).94

We, therefore, conclude that the terms "electronic data message" and "electronic document," as defined under the Electronic Commerce Act of 2000, do not include a facsimile transmission. Accordingly, a facsimile transmission cannot be considered as electronic evidence. It is not the functional equivalent of an original under the Best Evidence Rule and is not admissible as electronic evidence.

Since a facsimile transmission is not an "electronic data message" or an "electronic document," and cannot be considered as electronic evidence by the Court, with greater reason is a photocopy of such a fax transmission not electronic evidence. In the present case, therefore, Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401 - 2 (Exhibits "E" and "F"), which are mere photocopies of the original fax transmittals, are not electronic evidence, contrary to the position of both the trial and the appellate courts.

- III -

Nevertheless, despite the pro forma invoices not being electronic evidence, this Court finds that respondent has proven by preponderance of evidence the existence of a perfected contract of sale.

In an action for damages due to a breach of a contract, it is essential that the claimant proves (1) the existence of a perfected contract, (2) the breach thereof by the other contracting party and (3) the damages which he/she sustained due to such breach. Actori incumbit onus probandi. The burden of proof rests on the party who advances a proposition affirmatively.95 In other words, a plaintiff in a civil action must establish his case by a preponderance of evidence, that is, evidence that has greater weight, or is more convincing than that which is offered in opposition to it.96

In general, contracts are perfected by mere consent,97 which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute.98 They are, moreover, obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present.99 Sale, being a consensual contract, follows the general rule that it is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts.100

The essential elements of a contract of sale are (1) consent or meeting of the minds, that is, to transfer ownership in exchange for the price, (2) object certain which is the subject matter of the contract, and (3) cause of the obligation which is established.101

In this case, to establish the existence of a perfected contract of sale between the parties, respondent Ssangyong formally offered in evidence the testimonies of its witnesses and the following exhibits:

Exhibit Description Purpose

E Pro forma Invoice dated 17 April 2000 with Contract No. ST2-POSTS0401-1, photocopy

To show that defendants contracted with plaintiff for the delivery of 110 MT of stainless steel from Korea payable by way of an irrevocable letter of credit in favor of plaintiff, among other conditions.

E-1 Pro forma Invoice dated 17 April 2000 with Contract No. ST2-POSTS0401, contained in facsimile/thermal paper faxed by defendants to plaintiff showing the printed transmission details on the upper portion of said paper as coming from defendant MCC on 26 Apr 00 08:41AM

To show that defendants sent their confirmation of the (i) delivery to it of the specified stainless steel products, (ii) defendants' payment thereof by way of an irrevocable letter of credit in favor of plaintiff, among other conditions.

E-2 Conforme signature of Mr. Gregory Chan, contained in facsimile/thermal paper faxed by defendants to plaintiff showing the printed transmission details on the upper portion of said paper as coming from defendant MCC on 26 Apr 00 08:41AM

To show that defendants sent their confirmation of the (i) delivery to it of the total of 220MT specified stainless steel products, (ii) defendants' payment thereof by way of an irrevocable letter of credit in favor of plaintiff, among other conditions.

F Pro forma Invoice dated 17 April 2000 with Contract No. ST2-POSTSO401-2, photocopy

To show that defendants contracted with plaintiff for delivery of another 110 MT of stainless steel from Korea payable by way of an irrevocable letter of credit in favor of plaintiff, among other conditions.

G Letter to defendant SANYO SEIKE dated 20 June 2000, contained in facsimile/thermal paper

To prove that defendants were informed of the date of L/C opening and defendant's conforme/approval thereof.

G-1 Signature of defendant Gregory Chan, contained in facsimile/thermal paper.

H Letter to defendants dated 22 June 2000, original

To prove that defendants were informed of the successful price adjustments secured by plaintiff in favor of former and were advised of the schedules of its L/C opening.

I Letter to defendants dated 26 June 2000, original

To prove that plaintiff repeatedly requested defendants for the agreed opening of the Letters of Credit, defendants' failure and refusal to comply with their obligations and the problems of J Letter to defendants dated 26

June 2000, original

plaintiff is incurring by reason of defendants' failure and refusal to open the L/Cs.

K Letter to defendants dated 27 June 2000, original

L Facsimile message to defendants dated 28 June 2000, photocopy

M Letter from defendants dated 29 June 2000, contained in facsimile/thermal paper faxed by defendants to plaintiff showing the printed transmission details on the upper portion of said paper as coming from defendant MCC on 29 June 00 11:12 AM

To prove that defendants admit of their liabilities to plaintiff, that they requested for "more extension" of time for the opening of the Letter of Credit, and begging for favorable understanding and consideration.

M-1 Signature of defendant Gregory Chan, contained in facsimile/thermal paper faxed by defendants to plaintiff showing the printed transmission details on the upper portion of said paper as coming from defendant MCC on June 00 11:12 AM

 

N Letter to defendants dated 29 June 2000, original

 

O Letter to defendants dated 30 June 2000, photocopy

To prove that plaintiff reiterated its request for defendants to L/C opening after the latter's request for extension of time was granted, defendants' failure and refusal to comply therewith extension of time notwithstanding.

P Letter to defendants dated 06 July 2000, original

 

Q Demand letter to defendants dated 15 Aug 2000, original

To prove that plaintiff was constrained to engaged services of a lawyer for collection efforts.

R Demand letter to defendants dated 23 Aug 2000, original

To prove that defendants opened the first L/C in favor of plaintiff, requested for further postponement of the final L/C and for minimal amounts, were urged to open the final L/C on time, and were informed that failure to comply will cancel the contract.

S Demand letter to defendants dated 11 Sept 2000, original

To show defendants' refusal and failure to open the final L/C on time, the cancellation of the contract as a consequence thereof, and final demand upon defendants to remit its obligations.

W Letter from plaintiff SSANGYONG to defendant SANYO SEIKI dated 13 April 2000, with fax back from defendants SANYO SEIKI/MCC to plaintiff SSANGYONG,

To prove that there was a perfected sale and purchase agreement between the parties for 220 metric tons of steel products at the price of US$1,860/ton.

contained in facsimile/thermal paper with back-up photocopy

W-1 Conforme signature of defendant Gregory Chan, contained in facsimile/thermal paper with back-up photocopy

To prove that defendants, acting through Gregory Chan, agreed to the sale and purchase of 220 metric tons of steel products at the price of US$1,860/ton.

W-2 Name of sender MCC Industrial Sales Corporation

To prove that defendants sent their conformity to the sale and purchase agreement by facsimile transmission.

X Pro forma Invoice dated 16 August 2000, photocopy

To prove that defendant MCC agreed to adjust and split the confirmed purchase order into 2 shipments at 100 metric tons each at the discounted price of US$1,700/ton.

X-1 Notation "1/2", photocopy To prove that the present Pro forma Invoice was the first of 2 pro forma invoices.

X-2 Ref. No. ST2-POSTS080-1, photocopy

To prove that the present Pro forma Invoice was the first of 2 pro forma invoices.

X-3 Conforme signature of defendant Gregory Chan, photocopy

To prove that defendant MCC, acting through Gregory Chan, agreed to the sale and purchase of the balance of 100 metric tons at the discounted price of US$1,700/ton, apart from the other order and shipment of 100 metric tons which was delivered by plaintiff SSANGYONG and paid for by defendant MCC.

DD Letter from defendant MCC to plaintiff SSANGYONG dated 22 August 2000, contained in facsimile/thermal paper with back-up photocopy

To prove that there was a perfected sale and purchase agreement between plaintiff SSANGYONG and defendant MCC for the balance of 100 metric tons, apart from the other order and shipment of 100 metric tons which was delivered by plaintiff SSANGYONG and paid for by defendant MCC.

DD-1 Ref. No. ST2-POSTS080-1, contained in facsimile/thermal paper with back-up photocopy

To prove that there was a perfected sale and purchase agreement between plaintiff SSANGYONG and defendant MCC for the balance of 100 metric tons, apart from the other order and shipment of 100 metric tons which was delivered by plaintiff SSANGYONG and paid for by defendant MCC.

DD-2 Signature of defendant Gregory Chan, contained in facsimile/thermal paper with back-up photocopy

To prove that defendant MCC, acting through Gregory Chan, agreed to the sale and purchase of the balance of 100 metric tons, apart from the other order and shipment of 100 metric tons which was delivered by plaintiff Ssangyong and paid for by defendant MCC.102

Significantly, among these documentary evidence presented by respondent, MCC, in its petition before this Court, assails the admissibility only of Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits "E" and "F"). After sifting through the records, the Court found that these invoices are mere photocopies of their original fax transmittals. Ssangyong avers that these documents were prepared after MCC asked for the splitting of the original order into two, so that the latter can apply for an L/C with greater facility. It, however, failed to explain why the originals of these documents were not presented.

To determine whether these documents are admissible in evidence, we apply the ordinary Rules on Evidence, for as discussed above we cannot apply the Electronic Commerce Act of 2000 and the Rules on Electronic Evidence.

Because these documents are mere photocopies, they are simply secondary evidence, admissible only upon compliance with Rule 130, Section 5, which states, "[w]hen the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated." Furthermore, the offeror of secondary evidence must prove the predicates thereof, namely: (a) the loss or destruction of the original without bad faith on the part of the proponent/offeror which can be shown by circumstantial evidence of routine practices of destruction of documents; (b) the proponent must prove by a fair preponderance of evidence as to raise a reasonable inference of the loss or destruction of the original copy; and (c) it must be shown that a diligent and bona fide but unsuccessful search has been made for the document in the proper place or places. It has been held that where the missing document is the foundation of the action, more strictness in proof is required than where the document is only collaterally involved.103

Given these norms, we find that respondent failed to prove the existence of the original fax transmissions of Exhibits E and F, and likewise did not sufficiently prove the loss or destruction of the originals. Thus, Exhibits E and F cannot be admitted in evidence and accorded probative weight.

It is observed, however, that respondent Ssangyong did not rely merely on Exhibits E and F to prove the perfected contract. It also introduced in evidence a variety of other documents, as enumerated above, together with the testimonies of its witnesses. Notable among them are Pro Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued by Ssangyong and sent via fax to MCC. As already mentioned, these invoices slightly varied the terms of the earlier invoices such that the quantity was now officially 100MT per invoice and the price reduced to US$1,700.00 per MT. The copies of the said August 16, 2000 invoices submitted to the court bear the conformity signature of MCC Manager Chan.

Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit "X"), however, is a mere photocopy of its original. But then again, petitioner MCC does not assail the admissibility of this document in the instant petition. Verily, evidence not objected to is deemed admitted and may be validly considered by the court in arriving at its judgment.104 Issues not raised on appeal are deemed abandoned.

As to Pro Forma Invoice No. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"), which was certified by PCIBank as a true copy of its original,105 it was, in fact, petitioner MCC which introduced this document in evidence. Petitioner MCC paid for the order stated in this invoice. Its admissibility, therefore, is not open to question.

These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080-2), along with the other unchallenged documentary evidence of respondent Ssangyong, preponderate in favor of the claim that a contract of sale was perfected by the parties.

This Court also finds merit in the following observations of the trial court:

Defendants presented Letter of Credit (Exhibits "1", "1-A" to "1-R") referring to Pro Forma Invoice for Contract No. ST2POSTS080-2, in the amount of US$170,000.00, and which bears the signature of Gregory Chan, General Manager of MCC. Plaintiff, on the other hand, presented Pro Forma Invoice referring to Contract No. ST2-POSTS080-1, in the amount of US$170,000.00, which likewise bears the signature of Gregory Chan, MCC. Plaintiff accounted for the notation "1/2" on the right upper portion of the Invoice, that is, that it was the first of two (2) pro forma invoices covering the subject contract between plaintiff and the defendants. Defendants, on the other hand, failed to account for the notation "2/2" in its Pro Forma Invoice (Exhibit "1-A"). Observably further, both Pro Forma Invoices bear the same date and details, which logically mean that they both apply to one and the same transaction.106

Indeed, why would petitioner open an L/C for the second half of the transaction if there was no first half to speak of?cra lawlibrary

The logical chain of events, as gleaned from the evidence of both parties, started with the petitioner and the respondent agreeing on the sale and purchase of 220MT of stainless steel at US$1,860.00 per MT. This initial contract was perfected. Later, as petitioner asked for several extensions to pay, adjustments in the delivery dates, and

discounts in the price as originally agreed, the parties slightly varied the terms of their contract, without necessarily novating it, to the effect that the original order was reduced to 200MT, split into two deliveries, and the price discounted to US$1,700 per MT. Petitioner, however, paid only half of its obligation and failed to open an L/C for the other 100MT. Notably, the conduct of both parties sufficiently established the existence of a contract of sale, even if the writings of the parties, because of their contested admissibility, were not as explicit in establishing a contract.107 Appropriate conduct by the parties may be sufficient to establish an agreement, and while there may be instances where the exchange of correspondence does not disclose the exact point at which the deal was closed, the actions of the parties may indicate that a binding obligation has been undertaken.108

With our finding that there is a valid contract, it is crystal-clear that when petitioner did not open the L/C for the first half of the transaction (100MT), despite numerous demands from respondent Ssangyong, petitioner breached its contractual obligation. It is a well-entrenched rule that the failure of a buyer to furnish an agreed letter of credit is a breach of the contract between buyer and seller. Indeed, where the buyer fails to open a letter of credit as stipulated, the seller or exporter is entitled to claim damages for such breach. Damages for failure to open a commercial credit may, in appropriate cases, include the loss of profit which the seller would reasonably have made had the transaction been carried out.109

- IV -

This Court, however, finds that the award of actual damages is not in accord with the evidence on record. It is axiomatic that actual or compensatory damages cannot be presumed, but must be proven with a reasonable degree of certainty.110 In Villafuerte v. Court of Appeals,111 we explained that:

Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered. They arise out of a sense of natural justice and are aimed at repairing the wrong done. Except as provided by law or by stipulation, a party is entitled to an adequate compensation only for such pecuniary loss as he has duly proven. It is hornbook doctrine that to be able to recover actual damages, the claimant bears the onus of presenting before the court actual proof of the damages alleged to have been suffered, thus:

A party is entitled to an adequate compensation for such pecuniary loss actually suffered by him as he has duly proved. Such damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. We have emphasized that these damages cannot be presumed and courts, in making an award must point out specific facts which could afford a basis for measuring whatever compensatory or actual damages are borne.112

In the instant case, the trial court awarded to respondent Ssangyong US$93,493.87 as actual damages. On appeal, the same was affirmed by the appellate court. Noticeably, however, the trial and the appellate courts, in making the said award, relied on the following documents submitted in evidence by the respondent: (1) Exhibit "U," the Statement of Account dated March 30, 2001; (2) Exhibit "U-1," the details of the said Statement of Account); (3) Exhibit "V," the contract of the alleged resale of the goods to a Korean corporation; and (4) Exhibit "V-1," the authentication of the resale contract from the Korean Embassy and certification from the Philippine Consular Office.

The statement of account and the details of the losses sustained by respondent due to the said breach are, at best, self-serving. It was respondent Ssangyong itself which prepared the said documents. The items therein are not even substantiated by official receipts. In the absence of corroborative evidence, the said statement of account is not sufficient basis to award actual damages. The court cannot simply rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend on competent proof that the claimant had suffered, and on evidence of, the actual amount thereof.113

Furthermore, the sales contract and its authentication certificates, Exhibits "V" and "V-1," allegedly evidencing the resale at a loss of the stainless steel subject of the parties' breached contract, fail to convince this Court of the veracity of its contents. The steel items indicated in the sales contract114 with a Korean corporation are different in all respects from the items ordered by petitioner MCC, even in size and quantity. We observed the following discrepancies:

List of commodities as stated in Exhibit "V":

COMMODITY: Stainless Steel HR Sheet in Coil, Slit EdgeSPEC: SUS304 NO. 1

SIZE/Q'TY:

2.8MM X 1,219MM X C 8.193MT

3.0MM X 1,219MM X C 7.736MT

3.0MM X 1,219MM X C 7.885MT

3.0MM X 1,219MM X C 8.629MT

4.0MM X 1,219MM X C 7.307MT

4.0MM X 1,219MM X C 7.247MT

4.5MM X 1,219MM X C 8.450MT

4.5MM X 1,219MM X C 8.870MT

5.0MM X 1,219MM X C 8.391MT

6.0MM X 1,219MM X C 6.589MT

6.0MM X 1,219MM X C 7.878MT

6.0MM X 1,219MM X C 8.397MT

TOTAL: 95.562MT115

List of commodities as stated in Exhibit "X" (the invoice that was not paid):

DESCRIPTION: Hot Rolled Stainless Steel Coil SUS 304

SIZE AND QUANTITY:

2.6 MM X 4' X C 10.0MT

3.0 MM X 4' X C 25.0MT

4.0 MM X 4' X C 15.0MT

4.5 MM X 4' X C 15.0MT

5.0 MM X 4' X C 10.0MT

6.0 MM X 4' X C 25.0MT

TOTAL: 100MT116

From the foregoing, we find merit in the contention of MCC that Ssangyong did not adequately prove that the items resold at a loss were the same items ordered by the petitioner. Therefore, as the claim for actual damages was not proven, the Court cannot sanction the award.

Nonetheless, the Court finds that petitioner knowingly breached its contractual obligation and obstinately refused to pay despite repeated demands from respondent. Petitioner even asked for several extensions of time for it to make good its obligation. But in spite of respondent's continuous accommodation, petitioner completely reneged on its contractual duty. For such inattention and insensitivity, MCC must be held liable for nominal damages. "Nominal damages are 'recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no actual present loss of any kind or where there has been a breach of contract and no substantial

injury or actual damages whatsoever have been or can be shown.'"117 Accordingly, the Court awards nominal damages of P200,000.00 to respondent Ssangyong.

As to the award of attorney's fees, it is well settled that no premium should be placed on the right to litigate and not every winning party is entitled to an automatic grant of attorney's fees. The party must show that he falls under one of the instances enumerated in Article 2208 of the Civil Code.118 In the instant case, however, the Court finds the award of attorney's fees proper, considering that petitioner MCC's unjustified refusal to pay has compelled respondent Ssangyong to litigate and to incur expenses to protect its rights.

WHEREFORE, PREMISES CONSIDERED, the appeal is PARTIALLY GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the award of actual damages is DELETED. However, petitioner is ORDERED to pay respondent NOMINAL DAMAGES in the amount of P200,000.00, and the ATTORNEY'S FEES as awarded by the trial court.

SO ORDERED.

Ynares-Santiago, J., Chairperson, Austria-Martinez, Chico-Nazario, Reyes, JJ., concur.

Endnotes:

17 Records, p. 215; Exhibit "E." This is a mere photocopy of the fax transmittal.

18 Id. at 218; Exhibit "F." This is a mere photocopy of the fax transmittal.

19 Id. at 219-220; Exhibit "G." The document is an original copy of the fax transmittal in thermal paper received by Ssangyong, however, the same is accompanied by a photocopy thereof containing a clearer print of its contents.

25 Id. at 226; Exhibit "L." The document is a mere photocopy of the original fax message.

26 Id. at 227-228; Exhibit "M." The document is an original copy of the fax transmittal in thermal paper received by Ssangyong, however, the same is accompanied by a photocopy thereof containing a clearer print of its contents.

28 Id. at 230; Exhibit "O." The document is a mere photocopy of the original letter.

32 Id. at 338; Exhibit "X." The document is a mere photocopy of the original fax transmittal.

33 Id. at 321; Exhibit "2-C." The document was certified as the true copy of its original by PCIBank.

34 Id. at 318-320; Exhibits "2", "2-A" and "2-B." These documents were certified as true copies of their originals by PCIBank.

36 Id. at 378-379; Exhibit "DD." The document is an original copy of the fax transmittal in thermal paper received by Ssangyong, however, the same is accompanied by a photocopy thereof containing a clearer print of its contents.

52 The firm's name was later changed to Zamora Poblador Vasquez & Bretaña.

64 Entitled "An Act Providing for the Recognition and Use of Electronic Commercial and Non-Commercial Transactions and Documents, Penalties for Unlawful Use Thereof and For Other Purposes." Approved on June 14, 2000.

65 Sections 6, 7 and 10 of R.A. No. 8792 read:

Sec. 6. Legal Recognition of Data Messages. Information shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the data message purporting to give rise to such legal effect, or that it is merely referred to in that electronic data message.

Sec. 7. Legal Recognition of Electronic Documents. - Electronic documents shall have the legal effect, validity or enforceability as any other document or legal writing, and'

(a) Where the law requires a document to be in writing, that requirement is met by an electronic document if the said electronic document maintains its integrity and reliability and can be authenticated so as to be usable for subsequent reference, in that '

(i) The electronic document has remained complete and unaltered, apart from the addition of any endorsement and any authorized change, or any change which arises in the normal course of communication, storage and display; and

(ii) The electronic document is reliable in the light of the purpose for which it was generated and in the light of all the relevant circumstances.

(b) Paragraph (a) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the document not being presented or retained in its original form.

(c) Where the law requires that a document be presented or retained in its original form, that requirement is met by an electronic document if '

(i) There exists a reliable assurance as to the integrity of the document from the time when it was first generated in its final form; and

(ii) That document is capable of being displayed to the person to whom it is to be presented: Provided, That no provision of this Act shall apply to vary any and all requirements of existing laws on formalities required in the execution of documents for their validity.

For evidentiary purposes, an electronic document shall be the functional equivalent of a written document under existing laws.

This Act does not modify any statutory rule relating to the admissibility of electronic data messages or electronic documents, except the rules relating to authentication and best evidence.

Sec. 10. Original Documents. - (1) Where the law requires information to be presented or retained in its original form, that requirement is met by an electronic data message or electronic document if:

(a) The integrity of the information from the time when it was first generated in its final form, as an electronic data message or electronic document is shown by evidence aliunde or otherwise; and

(b) Where it is required that information be presented, that the information is capable of being displayed to the person to whom it is to be presented.

(2) Paragraph (1) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the information not being presented or retained in its original form.

(3) For the purposes of subparagraph (a) of paragraph (1):

(a) the criteria for assessing integrity shall be whether the information has remained complete and unaltered, apart from the addition of any endorsement and any change which arises in the normal course of communication, storage and display; and

(b) the standard of reliability required shall be assessed in the light of the purpose for which the information was generated and in the light of all relevant circumstances.

66 A.M. No. 01-7-01-SC, effective on August 1, 2001.

67 Rule 3 of the Rules on Electronic Evidence reads:

RULE 3

ELECTRONIC DOCUMENTS

SECTION 1. Electronic Documents as functional equivalent of paper-based documents. - Whenever a rule of evidence refers to the term writing, document, record, instrument, memorandum or any other form of writing, such term shall be deemed to include an electronic document as defined in these Rules.

SEC. 2. Admissibility. - An electronic document is admissible in evidence if it complies with the rules on admissibility prescribed by the Rules of Court and related laws and is authenticated in the manner prescribed by these Rules.

68 Rule 4 of the Rules on Electronic Evidence reads:

RULE 4

BEST EVIDENCE RULE

SECTION 1. Original of an Electronic Document. - An electronic document shall be regarded as the equivalent of an original document under the Best Evidence Rule if it is a printout or output readable by sight or other means, shown to reflect the data accurately.

SEC. 2. Copies as equivalent of the originals. - When a document is in two or more copies executed at or about the same time with identical contents, or is a counterpart produced by the same impression as the original, or from the same matrix, or by mechanical or electronic re-recording, or by chemical reproduction, or by other equivalent techniques which accurately reproduces the original, such copies or duplicates shall be regarded as the equivalent of the original.

Notwithstanding the foregoing, copies or duplicates shall not be admissible to the same extent as the original if:

(a) a genuine question is raised as to the authenticity of the original; or

(b) in the circumstances it would be unjust or inequitable to admit the copy in lieu of the original.

69 The Electronic Commerce Act of 2000 provides, in its Section 34, that the DTI [Department of Trade and Industry], Department of Budget and Management and the Bangko Sentral ng Pilipinas are empowered to enforce the provisions of the Act and issue implementing rules and regulations necessary, in coordination with the Department of Transportation and Communications, National Telecommunications Commission, National Computer Center, National Information Technology Council, Commission on Audit, other concerned agencies and the private sector, to implement the Act within sixty (60) days after its approval.

70 On June 12, 1996, the Commission, after consideration of the text of the draft Model Law as revised by the drafting group, decided to adopt the said law and to recommend that all States give favorable consideration to the said Model Law on Electronic Commerce when they enact or revise their laws, in view of the need for uniformity of the law applicable to alternatives of paper-based forms of communication and storage of information (UNCITRAL Model Law on Electronic Commerce with Guide to Enactment 1996 with additional article 5 bis as adopted in 1998, United Nations Publication, New York, 1999).

71 Record of the Senate, Vol. III, No. 61, February 16, 2000, p. 405.

72 R.A. No. 8792 is a consolidation of Senate Bill 1902 and House Bill 9971 (Senate Proceedings, June 8, 2000, p. 90).

73 The Electronic Commerce Act and its Implementing Rules and Regulations, Annotations by Atty. Jesus M. Disini, Jr., Legislative History by Janette C. Toral, published by the Philippine Exporters Confederation, Inc. in September 2000.

82 In its Guide to Enactment, the UNCITRAL explains the functional-equivalent approach of the Model Law in this way:

"E. The 'functional-equivalent' approach

"15. The Model Law is based on the recognition that legal requirements prescribing the use of traditional paper-based documentation constitute the main obstacle to the development of modern means of communication. In the preparation of the Model Law, consideration was given to the possibility of dealing with impediments to the use of electronic commerce posed by such requirements in national laws by way of extension of the scope of such notions as 'writing', 'signature' and 'original', with a view to encompassing computer-based techniques. Such an approach is used in a number of existing legal instruments, e.g., article 7 of the UNCITRAL Model Law on International Commercial Arbitration and article 13 of the United Nations Convention on Contracts for the International Sale of Goods. It was observed that the Model Law should permit States to adapt their domestic legislation to developments in communications technology applicable to trade law without necessitating the wholesale removal of the paper-based requirements themselves or disturbing the legal concepts and approaches underlying those requirements. At the same time, it was said that electronic fulfillment of writing requirements might in some cases necessitates the

development of new rules. This was due to one of many distinctions between EDI messages and paper-based documents, namely, that the latter were readable by the human eye, while the former were not so readable unless reduced to paper or displayed on a screen.

"16. The Model Law thus relies on a new approach, sometimes referred to as the 'functional equivalent approach', which is based on an analysis of the purposes and functions of the traditional paper-based requirement with a view to determining how those purposes or functions could be fulfilled through electronic-commerce techniques. For example, among the functions served by a paper document are the following: to provide that a document would be legible by all; to provide that a document would remain unaltered over time; to allow for the reproduction of a document so that each party would hold a copy of the same data; to allow for the authentication of data by means of a signature; and to provide that a document would be in a form acceptable to public authorities and courts. It should be noted that in respect of all of the above-mentioned functions of paper, electronic records can provide the same level of security as paper and, in most cases, a much higher degree of reliability and speed, especially with respect to the identification of the source and content of the data, provided that a number of technical and legal requirements are met. However, the adoption of the functional-equivalent approach should not result in imposing on users of electronic commerce more stringent standards of security (and the related costs) than in a paper-based environment.

"17. A data message, in and of itself, cannot be regarded as an equivalent of a paper document in that it is of a different nature and does not necessarily perform all conceivable functions of a paper document. That is why the Model Law adopted a flexible standard, taking into account the various layers of existing requirements in a paper-based environment: when adopting the "functional-equivalent" approach, attention was given to the existing hierarchy of form requirements, which provides distinct levels of reliability, traceability and inalterability with respect to paper-based documents. For example, the requirement that date be presented in written form (which constitutes a 'threshold requirement') is not to be confused with more stringent requirements such as 'signed writing,' 'signed original' or 'authenticated legal act'.

"18. The Model Law does not attempt to define a computer-based equivalent to any kind of paper document. Instead, it singles out basic functions of paper-based form requirements, with a view to providing criteria which, once they are met by data messages, enable such data messages to enjoy the same level of legal recognition as corresponding paper documents performing the same function. It should be noted that the functional-equivalent approach has been taken in articles 6 to 8 of the Model Law with respect to the concepts of 'writing', 'signature' and 'original' but not with respect to other legal concepts dealt with in the Model Law. For example, article 10 does not attempt to create a functional equivalent of existing storage requirements." (UNCITRAL Model Law on Electronic Commerce with Guide to Enactment 1996 with additional article 5 bis as adopted in 1998, United Nations publication, New York, 1999.)

87 Go v. Commission on Elections, G.R. No. 147741, May 10, 2001, 357 SCRA 739, involving the filing of a withdrawal of certificate of candidacy thru fax, but the original copy thereof was filed on the following day; see also Justice Cuevas v. Muñoz, 401 Phil. 752 (2000), in which the facsimile transmission of the request for provisional arrest and other supporting documents was allowed in extradition proceedings; Heirs of Lourdes Sabanpan v. Comorposa, 456 Phil. 161 (2003), concerning a facsimile signature; and Cathay Pacific Airways v. Fuentebella, G.R. No. 142541, December 15, 2005, 478 SCRA 97, which involves a facsimile transmission of a notice of hearing.

93 The Philippine Statistical System (PSS), through the NSCB, created the Task Force to address the statistical information requirements of the Electronic Commerce Act of 2000. The composition of the Task Force is as follows: the Department of Trade and Industry as Chair; the NSCB as Vice Chair; and the Bangko Sentral ng Pilipinas, the Commission on Audit, the Department of Budget and Management, the Department of Labor and Employment, the Department of Science and Technology, the Department of Transportation and Communications/National Telecommunications Commission, the National Computer Center, the National Economic and Development Authority, the National Statistics Office, the Statistical Research and Training Center, and the Philippine Internet Services Organization, as members.

97 Civil Code, Art. 1315.

100 Civil Code, Art. 1475.

105 Under Rule 130, Section 7, a certified true copy is an admissible evidence only when the original document is a public record.